Yadkin Valley's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted purchases of units in April would be:
A) 7,000 units
B) 6,000 units
C) 6,300 units
D) 7,300 units

Question

Quizplus · Accepted Answer

To determine the budgeted purchases, we need to calculate the total units needed for sales and ending inventory.

Sales forecast = 6,000 units 
Desired ending inventory = 1,000 x 1.30 = 1,300 units

Total units needed = Sales forecast + Desired ending inventory = 6,000 + 1,300 = 7,300 units

However, we already have 1,000 units in the beginning inventory, so the actual units to purchase would be:

Actual purchases = Total units needed - Beginning inventory = 7,300 - 1,000 = 6,300 units

Therefore, the answer is C) 6,300 units.

Yadkin Valley's April Sales Forecast Projects That 6,000 Units Will