Question

Below is budgeted production and sales information for Octofic Cans Inc. for the month of March:

Answer 1

Answer:

The Budgeted sales for the month are 108,000 units. The right answer is b.

The true answer is c. Unit variable cost remains constant with changes in production

Explanation:

In order to calculate the Budgeted sales for the month we would have to calculate the following formula:

Budgeted sales= Estimated sales + Desired ending inventory - Beginning inventory

= (85,000+25,000)+4,000 - 6,000

= 108,000  units

The Budgeted sales for the month are 108,000 units

Variable cost per unit remains same even though there's a change in output. Hence, Unit variable cost remains constant with changes in production.

Answer 2

Answer: 108,000 ; Unit variable cost remains constant with changes in production

Explanation:

The sales budget is part of the main budget and it is used to predict the amount of revenue that will be gotten from sales of a particular good or services. For this question, the budgeted sales for the month will be the estimated sales added to the desired ending inventory, then the beginning inventory is subtracted. This will be:

= (85,000+25,000) + 4,000 - 6,000

= 110,000 + 4,000 - 6,000

= 108,000

The thing true about the variable cost is that the variable cost per unit will remain the same even though there is a change in output. Therefore, option C is the right answer.