Question

EB3.

LO 7.2Barnstormer sells airplane accessories for $20 each. It expects sales of 120,000 units in quarter 1 and a 7% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year.

Answer 1

Please see the explanation

Step-by-step explanation:

Sales budget for the 4 quarters of the first year is given as follows:

Quarter 1 sales=120,000*$20=$2,400,000

Since there is 7% increase in each subsequent quarter, therefore the sales for the subsequent quarters of year 1 shall be calculated as follows:

Quarter 2 sales=$2,400,000*1.07=$2,568,000

Quarter 3 sales=$2,568,000*1.07=$2,747,760

Quarter 4 sales=$2,747,760*1.07=$2,940,103.2