Question
In: Accounting
Concord Corporationestimates its sales at 230000 units in the first quarter and that sales will increase...
Concord Corporationestimates its sales at 230000 units in the first quarter and that sales will increase by 23000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.
Production in units for the third quarter should be budgeted at
276000.
281750.
350750.
264500.
Solutions
Expert Solution
- All working forms part of the answer
- Note: Working for all the quarters are provided so that the Quarter #3 production needs can be calculated:
|
Working |
Q1 |
Q2 |
Q3 [ANSWER column] |
Q4 |
|
|
A |
Budgeted estimated sales |
230,000.00 |
253,000.00 |
276,000.00 |
299,000.00 |
|
B = 25% of next quarter’s ‘A’ |
Desired ending Inventory |
63,250.00 |
69,000.00 |
74,750.00 |
- |
|
C = A+ B |
Total budgeted needs |
293,250.00 |
322,000.00 |
350,750.00 |
299,000.00 |
|
D = 'B' of last quarter |
Beginning Inventory |
- |
63,250.00 |
69,000.00 |
74,750.00 |
|
E = C - D |
Production in Units |
293,250.00 |
258,750.00 |
281,750.00 [ ANSWER] |
224,250.00 |
- Hence, as seen from above working, production needs (in units) for third quarter = 281,750 units
Answer = Option #2: 281,750 units.
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