Question

Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 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
274,500.
207,000.
216,000.
220,500.

Answer 1

Answer:

correct option is 220,500

Explanation:

given data

sales = 180,000 units

sales increase = 18,000 units each quarter

ending inventory = 25%

solution

we know here that Quarter 2 Sales is

Quarter 2  = 180000 + 18000 = 198000  units

and

Quarter 3 Sales will be

Quarter 3 Sales = 198000 + 18000 = 216000  units

so that Production for Quarter 3  will be here as

Production for Quarter 3 = Sales + Closing Inventory - Opening Inventory ..................1

put here value

Production for Quarter 3 = 216000 + 25% of  216000 - 25 % of 198000

Production for Quarter 3  = 216,000 + 54,000 - 49,500

Production for Quarter 3 = $220500

so correct option is 220,500