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klio [65]
3 years ago
9

Vermicelli Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per mont

h. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 150,000 finished units in inventory on June 30.Vermicelli Company's production requirement in units of finished product for the three-month period ending September 30 is: (CMA adapted)712,025 units.
Business
1 answer:
Lapatulllka [165]3 years ago
3 0

Answer:

Production budget in July    = 218,000 units

Explanation:

Production budget = sales budget + closing inventory - opening inventory

                             

August sales = 105%× July sales

= 105%× 200,000 = 210,000

Closing inventory in July = 80% × August sales

= 80%  ×210,000  = 168,000

Opening inventory in July = Closing inventory in June = 150 000 units

Production budget in July = 200,000 + 168000  - 150,000

                                            = 218,000 units

Production budget in July    = 218,000 units

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How much is the total budgeted variable selling and administrative expenses for October?

  • $17,150

Explanation:

                                  Variable Cost          Fixed Cost        Total costs

                                  <u>   Per Unit        </u>        <u>                    </u>       <u>for 7,000 units</u>

Sales commissions        $0.60                     $7,000              $11,200

Shipping                          $1.20                                                $8,400

Advertising                     $0.30                                                $2,100

Executive salaries                                       $34,000           $34,000

Depreciation                                                  $8,000             $8,000

<u>Other                              $0.35                    $28,000           $30,450</u>

TOTAL                            $2.45                    $77,000            $94,150

How much is the total budgeted variable selling and administrative expenses for October?

total variable costs per unit = $2.45 x 7,000 units = $17,150

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