Q3TI - Horngren'S Financial And Managerial Accounting

Question

11. Kendall Company projects 2019 first quarter sales to be $10,000 and increase by 5% per quarter. Determine the projected sales for 2019 by quarter and in total. Round answers to the nearest dollar. 

 

12. Friedman Company manufactures and sells bicycles. A popular model is the XC. The company expects to sell 1,500 XCs in 2018 and 1,800 XCs in 2019. At the beginning of 2018, Friedman has 350 XCs in Finished Goods Inventory and desires to have 10% of the next year’s sales available at the end of the year. How many XCs will Friedman need to produce in 2018?

Step-by-Step Solution

Answer

11. The total sales for the year are $43,101.25

12. The budgeted XC’s to be produced are 1,330 Units.

Step 1: Meaning of Budget

The term budget refers to estimating the activities to be performed in the future for better growth. The budget can be related to how many units we will sell in the future and the costs. It gives us a goal to achieve effectively and efficiently.

Step 2: Calculation of projected sales for 2019 by quarter and in total

Particulars	Amount ($)
Sales of quarter 1	$10,000
Sales of quarter 2  $(\mathbf{\$}\mathbf{10}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{5}\mathbf{\%})$	10,500
Sales of quarter 3  $(\mathbf{\$}\mathbf{10}\mathbf{,}\mathbf{500}\mathbf{+}\mathbf{5}\mathbf{\%})$	11,025
Sales of quarter 4  $(\mathbf{\$}\mathbf{11}\mathbf{,}\mathbf{025}\mathbf{+}\mathbf{5}\mathbf{\%})$	11,576.25
Total Sales	$43,101.25

Step 3: Preparation of production budget

Particulars	2018 (Units)
Budgeted XC’s to be sold	1,500
Add: Desired XC’s in ending inventory  $\mathbf{(}\mathbf{1800}\mathbf{\times }\mathbf{10}\mathbf{\%}\mathbf{)}$	180
Total XC’s needed	1,680
Less: XC’s in beginning inventory	(350)
Budgeted XC’s to be produced	1,330