Friden Company has budgeted sales and production over the next quarter as follows:
On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?
A) 128,000 units.
B) 160,000 units.
C) 184,000 units.
D) 188,000 units.

Question

Friden Company has budgeted sales and production over the next quarter as follows: 
On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?
A) 128,000 units. 
B) 160,000 units. 
C) 184,000 units. 
D) 188,000 units.

Quizplus · Accepted Answer

To calculate the budgeted sales for June, we need to work backwards from the expected sales in July.

July sales: 140,000 units

End of June inventory: 20% of July sales = 28,000 units

Total units needed in June: 140,000 + 28,000 = 168,000 units

Beginning inventory in June: 20,000 units

Total units available in June: 20,000 + budgeted production

Therefore, budgeted production = 168,000 - 20,000 = 148,000 units

June sales: Budgeted production - End of June inventory = 148,000 - 28,000 = 120,000 units

Therefore, the budgeted sales for June is 120,000 units, which is option B.

Friden Company Has Budgeted Sales and Production Over the Next