Fantastic Futons manufactures futons. The estimated number of futon sales for the first three...

Question:

Fantastic Futons manufactures futons. The estimated number of futon sales for the first three months of 2014 are as follows:

January 40,000

February 50,000

March 60,000

Finished goods inventory at the end of 2013 was 10,000 units.

On average, 25% of the futons to be sold in the next month are produced and kept as ending balance in finished goods inventory.

The planned selling price is $150 per unit.

What would be the sales budget for March of Fantastic Futons?

Sales Budget:

Sales budge is a statement that shows that the amount f goods that is expected to be sold in upcoming period. It helps the company to plan the manufacturing process in advance according to the demand.

Answer and Explanation:

Fantastic Futons Manufacturers

Sales Budget

For the first three Months of, 2014

Sales Jan Feb March
Budgeted sales Units $40,000 $50,000 $60,000
Selling price per Unit $150 $150 $150
Total sales $6,000,000 $7,500,000 $9,000,000
Budgeted sales $6,000,000 $7,500,000 $9,000,000
Add: Desired ending inventory of finished goods $1,875,000 $2,250,000
Total needs $7,875,000 $9,750,000
Less: Beginning inventory of finished goods $1,500,000 $1,875,000
Required sales $6,375,000 $7,875,000

Learn more about this topic:

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Sales Budget: Definition & Examples

from Accounting 301: Applied Managerial Accounting

Chapter 11 / Lesson 4
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