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Homework answers / question archive / a) Montenegro Company’s Sales budget shows the following expected sales for the following year: Quarter Units First 120,000

a) Montenegro Company’s Sales budget shows the following expected sales for the following year: Quarter Units First 120,000

Finance

a) Montenegro Company’s Sales budget shows the following expected sales for the following year:

Quarter

Units

First

120,000.00

Second

160,000.00

Third

90,000.00

Fourth

110,000.00

Total

480,000.00

b. The inventory for Dec 31 of the prior year was budgeted at 36,000 units.

c. The quantity of finished goods inventory at the end of each quarter is to equal 30% of the next quarter’s budgeted unit sales.

Question: How many units should be produced during the first quarter?

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Answer:

Company want to have finished goods inventory equal to 30% of next quarter's budgeted sales figure in current quartet.

Means if first quarter is going then 30% of second quarter budgeted sales unit stock should there.(in the 1st quarter).

So in the first quarter company should have 30% of second quarter budgeted sales unit.

2nd quarter budgeted sales unit is 160,000.

then,

30% of 160,000

30% * 160,000

= 48,000 units

So there should 48,000 finished goods inventory during the first quarter.

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