Question

The sales budget for Modesto Corp. shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product A for the year would be:

Answer 1

Budgeted purchases of A 20,400

Explanation:

A B

Sales 20,000 22,000

Closing Inventory 3,000

2000*1.2 2,400

Less: Opening Inventory (2,000) (2,500)

Purchases 20,400 22,500

Formula for this is

Purchases + opening stocks=Sales + closing stocks

Purchases= Sales+ closing stocks-opening stocks