Health Resources expects to sell 500 units of Product A and 380 units of Product
ID: 2460256 • Letter: H
Question
Health Resources expects to sell 500 units of Product A and 380 units of Product B each day at an average price of $16 for Product A and $27 for Product B. The expected cost for Product A is 38% of its selling price and the expected cost for Product B is 56% of its selling price. Health Resources has no beginning inventory, but it wants to have a fiveday supply of ending inventory for each product. Compute the company's budgeted sales for the next (sevenday) week. (Round the answer to the nearest dollar.)
A.
$18,260
B.
$91,300
C.
$127,820
D.
$8,786
Explanation / Answer
Given below are the data : Product A Product B
Selling units each day 500 units 380 units
Selling price per unit @ $16 / unit @ $27 / unit
Expected cost 38% of S.P 56% of S.P
Closing inventory 5 days supply 5 days supply
Let's calculate closing inventory for each product
Product A = 500 units each day * 5 days = 2500 units
Product B = 380 units each day * 5 days = 1900 units
We wants to calculate company's budgeted sales for next seven days and we already have 5 days inventory lying with us which is ready for sale as above. Now we wants two additional days inventory so let's calculate this for each product first
Product A = 500 units each day * 2 days = 1000 units
Product B = 380 units each day * 2 days = 760 units
Hence total budgeted sales units available for next 7 days are :
Product A = 2500 units + 1000 units = 3500 units
Product B = 1900 units + 760 units = 2660 units
Budgeted sales for next week for each products :
Product A = 3500 units * $ 16 per unit = $ 56000
Product B = 2660 units * $ 27 per unit = $ 71820
Hence total budgeted sales for the company for next week = $56000 + $71820 = $127820
Hence correct answer is " C "
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