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13 August, 21:31

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:

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  1. 13 August, 22:33
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    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
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