Question

ABC Corp has the following sales data forecast for the next year

Q1 Budgeted sales in units 4,240
Q2 Budgeted sales in units 5,300
Q3 Budgeted sales in units 6,360
Q4 Budgeted sales in units 5,830
Selling price/ per unit $10.60 Sales collection in current quarter 65% Sales collection in next quarter 30% Uncollectible 5% Last year outstanding A/R $42,665.00 Last year ending inventory 1060.00 desired ending inventory is 7.95% of next quarter budgeted sales desired ending inventory for the forth quarter is 1192.50

Answer 1

ABC Corp's sales data forecast includes budgeted sales units across four quarters, a selling price per unit, and percentage of sales collected within certain periods. An accounting profit example is provided using explicit costs deducted from total revenues.

Step-by-step explanation:

Sales Data Forecast and Analysis

When analyzing the sales data forecast for ABC Corp, we observe that it has budgeted sales units for the next year across four quarters, with a selling price of $10.60 per unit. The company expects to collect 65% of sales in the current quarter, 30% in the next quarter, and they have a provision for 5% as uncollectible. An example taken from previous data shows a situation where a firm reports an accounting profit by deducting explicit costs from total revenues.

To illustrate with an example, if a firm had sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit would be $100,000. This reflects only the firm's explicit costs. For economic profit, one needs to subtract any implicit costs as well.