Question

At January 1, 2016, Waterway Industries has beginning inventory of 1500 surfboards. Waterway estimates it will sell 5000 units during the first quarter of 2016 with a 12% increase in sales each quarter. Waterway’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2016?

Answer 1

the budgeted revenue for the third quarter is $940,800

Step-by-step explanation:

The computation of the budgeted revenue for the third quarter is shown below:

= Number of unit sold in the first quarter × increase in sales percentage × increase in sales percentage × selling value

= 5,000 × 1.12 × 1.12 × $150

= $940,800

Hence, the budgeted revenue for the third quarter is $940,800