12. The sales budget for Modesto Corp. shows that 21,900 units of Product A and

Question

12. The sales budget for Modesto Corp. shows that 21,900 units of Product A and 23,900 units of Product B are going to be sold for prices of $11.90 and $13.90, respectively. The desired ending inventory of Product A is 10% higher than its beginning inventory of 3,900 units. The beginning inventory of Product B is 4,400 units. The desired ending inventory of B is 4,900 units. Budgeted purchases of Product A for the year would be:

21,900 units.

26,190 units.

14,090 units.

22,290 units.

21,400 units.

Explanation / Answer

Budgeted Purchases = Budgeted Sales + Ending Inventory - Beginning Inventory

= 21,900 + 4290 - 3900 = 22,290 units

Ending Inventory = 3900 + 390 = 4290 units

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