Keith, a manager of a store in Florida, is involved in the preparation of the sales budget for August 2024. He estimates that in August the sales volume will be around 5,000 units @ $20 per unit. Keith expects an average of 6% sales return, and to boost sales, he decides to offer a flat discount of 22% of the original selling price to all customers. Based on the given information, budgeted net sales for August 2024 will be
Questions 100, 101, 103, 104, 106, 108, and 110 do not remove the discount on the returned items. I am not sure of this treatment. I discussed with colleagues and they were split 50 50 as to leave discount in or remove it when items are returned.
If I am understanding correctly, it appears that you are suggesting that we would calculate the sales discount as: (Gross Sales - Returns) x Discount %. Is this how you see it as well? This suggestion makes sense but even the text itself supports the method that we have used which can be seen on page 44 of the Chapter 6 pdf. It uses Gross sales to multiply against the percentage and then subtract. If you want us to deviate from the text, we can. Please let us know.
A) $72,000.
B) $73,320.
C) $79,320.
D) $94,000.

Question

Quizplus · Accepted Answer

Budgeted Net Sales = Gross Sales F1F1F1S1?F1F1F10 Sales Returns F1F1F1S1?F1F1F10 Sales Discounts;
Gross Sales = Number of Units Sold × Sales Price per Unit
= 5,000 × $20 = $100,000
Sales Returns = Gross Sales × Sales Return Percentage = $100,000 × 6% = $6,000
Sales Discounts = Gross Sales × Sales Discount Percentage
= $100,000 × 22% = $22,000
Budgeted Net Sales = $100,000 F1F1F1S1?F1F1F10 $6,000 F1F1F1S1?F1F1F10 $22,000 = $72,000

Keith, a Manager of a Store in Florida, Is Involved