Question

MFL Sales expects to sell 400 units of Product A and 360 units of Product B each day at an average price of $20 for Product A and $26 for Product B. The expected cost for Product A is 36% of its selling price and the expected cost for Product B is 59% of its selling price. MFL Sales has no beginning inventory, but it wants to have a six-day supply of ending inventory for each product. Compute the budgeted cost of goods sold for the next (seven-day) week.

Answer 1

budgeted cost of goods sold $58817

Step-by-step explanation:

given data

Product A sell = 400 units

Product B sell = 360 units

Product A average price = $20

Product B average price = $26

Product A expected cost = 36 %

Product B expected cost = 59 %

solution

as per cost of goods sold budget for 7 days

particular

(1) sales revenue

( per day sale unit × 7 days ) × price

so for product A = 400×20×7 = $56000

so for product B = 360×26 ×7 = $65520

total is $121520

and

(2) cost of good sold is (sale value ) 36% and 59%

so for product A = $56000 × 36% = $20160

so for product b = $65520 × 59% = $38656.80

total is 58816.80 = $58817