Asked by Taylyn Vences on Apr 24, 2024
Verified
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) :
A) 88,000
B) 90,000
C) 86,000
D) 84,000
Budgeted Sales
Projected sales revenue for a given period based on market analysis and company objectives.
Budgeted Production
The quantity of units that a company plans to produce in a specific period, based on forecasted sales and desired inventory levels.
- Receive an education on the concept and development process of several budget forms, including sales, manufacturing overhead, cash, direct materials, and production budgets.
- Comprehend the computation and significance of final inventory quantities for completed products and unprocessed materials within the budgeting framework.
Verified Answer
JC
Jorge Colon7 days ago
Final Answer :
B
Explanation :
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.
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.
Learning Objectives
- Receive an education on the concept and development process of several budget forms, including sales, manufacturing overhead, cash, direct materials, and production budgets.
- Comprehend the computation and significance of final inventory quantities for completed products and unprocessed materials within the budgeting framework.
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