Frolic Corporation has budgeted sales and production over the next quarter as follows: The company has 17,500 units of product on hand at July 1. 25% of the next month's sales in units should be on hand at the end of each month. October sales are expected to be 97,000 units. Budgeted sales for September would be (in units):

Question

Frolic Corporation has budgeted sales and production over the next quarter as follows:  The company has 17,500 units of product on hand at July 1. 25% of the next month's sales in units should be on hand at the end of each month. October sales are expected to be 97,000 units. Budgeted sales for September would be (in units):

Quizplus · Accepted Answer

To determine September sales, we need to calculate how many units need to be on hand at the end of September.

October sales = 97,000 units 
25% of October sales = 24,250 units (should be on hand at the end of September) 
Add the units on hand at the beginning of September: 17,500 units 
Total units needed at the end of September = 41,750 units

To calculate September sales: 
Units on hand at the end of August = 24,250 units (25% of September sales) + 17,500 units (units on hand at July 1) = 41,750 units 
September sales = Total units needed in September – units on hand at the end of September 
September sales = 88,000 units (97,500 – 41,750)

Therefore, the best choice is B.

Frolic Corporation Has Budgeted Sales and Production Over the Next