Larry's Custom Bird Cages has budgeted unit sales for the first quarter of the year as follows: Larry wishes to have 20% of the next month's sales in ending inventory. If the January 1 beginning inventory consisted of 74 units, budgeted purchases for February would be:

Question

Larry's Custom Bird Cages has budgeted unit sales for the first quarter of the year as follows:  Larry wishes to have 20% of the next month's sales in ending inventory. If the January 1 beginning inventory consisted of 74 units, budgeted purchases for February would be:

Quizplus · Accepted Answer

To determine the budgeted sales for February, we need to take the January sales and add the desired ending inventory for February. According to the question, Larry wishes to have 20% of the next month's sales in ending inventory. Therefore, the desired ending inventory for February would be:

(2,400 x 0.2) = 480 units

To determine the total units needed in February, we then add the desired ending inventory to the budgeted sales for February:

760 + 480 = 1,240 units

To determine the required purchases for February, we subtract the beginning inventory from the total units needed in February:

1,240 - 74 = 1,166 units

Therefore, the budgeted purchases for February would be 1,166 units. However, we need to convert this to the nearest hundred, which is 1,200.

Since the question only offers rounded answer choices, the best choice is C (402 units).

Larry's Custom Bird Cages Has Budgeted Unit Sales for the First