Sevenbergen Corporation makes one product and has provided the following informa

Question

Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:

Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month’s raw materials production needs.

The budgeted sales for August is closest to:

Multiple Choice

$956,800

$1,039,600

$993,600

$828,000

Budgeted selling price per unit $ 92 Budgeted unit sales (all on credit): July 9,000 August 11,300 September 10,400 October 10,800

Explanation / Answer

Budgeted unit sales for August = 11,300
Budgeted Selling price per unit = $92

Budgeted Sales for August = Budgeted unit sales for August * Budgeted Selling price per unit
Budgeted Sales for August = 11,300 * $92
Budgeted Sales for August = $1,039,600

So, budgeted sales for August is closest to $1,039,600

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