The sales budget for Modesto Corp.shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12,respectively.The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units.The beginning inventory of Product B is 2,500 units.The desired ending inventory of B is 3,000 units.Total budgeted sales of both products for the year would be:

Question

Quizplus · Accepted Answer

Total budgeted sales for Product A = 20,000 units x $10/unit = $200,000
Total budgeted sales for Product B = 22,000 units x $12/unit = $264,000

The beginning inventory of Product A is 2,000 units, so the desired ending inventory would be 20% higher or 2,400 units. Therefore, the total units of Product A that need to be purchased/supplied = 20,000 units + 2,400 units - 2,000 units = 20,400 units

The desired ending inventory of Product B is 3,000 units and the beginning inventory is 2,500 units. Therefore, the total units of Product B that need to be purchased/supplied = 22,000 units + 3,000 units - 2,500 units = 22,500 units

Total budgeted sales for both products = Total budgeted sales for Product A + Total budgeted sales for Product B = $200,000 + $264,000 = $464,000. Therefore, the best choice is D.

The Sales Budget for Modesto Corp