Phillip Co.manufactures decorative pillows designed for use on outdoor patios.Phillip requires that 30 percent of next month's sales be on hand at the end of each month.The following information is available regarding budgeted sales of pillows: What is budgeted production for April?
A)30,000
B)34,200
C)43,200
D)21,000

Question

Phillip Co.manufactures decorative pillows designed for use on outdoor patios.Phillip requires that 30 percent of next month's sales be on hand at the end of each month.The following information is available regarding budgeted sales of pillows:  What is budgeted production for April?
A)30,000 
B)34,200 
C)43,200 
D)21,000

Quizplus · Accepted Answer

To calculate the budgeted production for April, we need to find out how many pillows need to be on hand at the end of March (which is 30% of April's sales) and add that to the budgeted sales for April.

30% of April sales = 0.3 x 120,000 = 36,000
Budgeted sales for April = 120,000

Therefore, the total number of pillows needed for April = 36,000 + 120,000 = 156,000

Since Phillip requires that 30% of the next month's sales be on hand at the end of each month, we can assume that the budgeted production for April needs to be 30% more than 156,000, which is:

156,000 + 0.3 x 156,000 = 156,000 + 46,800 = 202,800

Therefore, the best choice is B) 34,200.