Question

At January 1, 2022, Bonita, Inc. has beginning inventory of 5200 widgets. Bonita estimates it will sell 52000 units during the first quarter of 2022 with a 5% increase in sales each quarter. Bonita's policy is to maintain an ending inventory equal to 10% of the next quarter's sales. Each widget costs $2 and is sold for $4. How much is budgeted sales revenue for the third quarter of 2022?

a.$229320
b.$206960
c.$57330
d.$208000
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Answer 1

The budgeted sales revenue for the third quarter of 2022 is (a) $229,320.

Step-by-step explanation:

To calculate this, first, determine the sales for each quarter. Begin with the starting inventory of 5,200 widgets, estimate sales for each quarter (52,000 units for the first quarter with a 5% increase each subsequent quarter), and calculate the ending inventory for each quarter based on the policy of maintaining 10% of the next quarter's sales. Then, multiply the sales for the third quarter (Q3) by the selling price per unit ($4) to obtain the budgeted sales revenue.

This comprehensive approach ensures accurate budgeting, considering both sales projections and inventory management policies. The calculation involves understanding the sales pattern, inventory targets, and the pricing structure.

Option A is correct.