Question

Hygeia Health expects to sell 500 units of Product A and 400 units of Product B each day at an average price of $18 for Product A and $30 for Product B. The expected cost for Product A is 41​% of its selling price and the expected cost for Product B is 61​% of its selling price. Hygeia Health has no beginning​ inventory, but it wants to have a five−day supply of ending inventory for each product. Compute the budgeted cost of goods sold for the next ​(seven−​day) week.​ (Round the answer to the nearest​ dollar.)

A. 72,870

B. 105,000

C. 55,050

D. 77,070

Answer 1

Answer: D. 77,070

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Product A:
Cost per unit             [Selling price per unit x 41% = $18 x 41%]                                                            (a)	7.38
Number of units of Product A budgeted to be sold each day	500
Number of units of Product A budgeted to be sold for 7 days    [500 units x 7 days]        (b)	3,500
Cost of Good sold                                                                                                                         (c = a x b)	25,830
Product B:
Cost per unit             [Selling price per unit x 61% = $30 x 61%]                                                            (d)	18.30
Number of units of Product B budgeted to be sold each day	400
Number of units of Product B budgeted to be sold for 7 days    [400 units x 7 days]       (e)	2,800
Cost of Good sold                                                                                                                         (f = d x e)	51,240
Total cost of goods sold                                                                                                          (c + f)	77,070