Answer:
The answer is:
$11.09 (21,360 units)
Step-by-step explanation:
To calculate this, let us first lay out the particulars first:
Since the question is on product A, I will focus in product A
Budgeted sales of product A = 20,800 units
Price of 20,800 units of product A = $10.80
Therefore, 1 unit = 10.80 ÷ 20,800 = $0.0005192
Beginning inventory = 2,800 units
Ending Inventory = 20% higher than beginning inventory
= 20/100 × 2,800 = 0.2 × 2,800 = 560 units
Therefore, ending inventory = 560 + 2,800 = 3,360 units
Next, since we know the projected budget sales and the ending inventory, we will calculate the total amount of inventory during the year as follows:
Total = budgeted sales + ending inventory = 20,800 + 3,360 = 24,160 units, but we are told that Modesto Corp. had a beginning inventory of 2,800, hence to calculate the budgeted purchases of product A in units, we will subtract this from the total inventory for the year as follows:
24,160 - 2,800 = 21,360 units
To find the budgeted purchase in dollars, the calculation is done as follows:
1 unit = $0.0005192
∴ 21,360 units = 21,360 × 0.0005192 = $11.09