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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Sales and production budgets

Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:

  Rumble Thunder
Estimated inventory (units), June 1 750 300
Desired inventory (units), June 30 500 250
Expected sales volume (units):    
East Region 12,000 3,500
West Region 14,000 4,000
Unit sales price $160 $200

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

Sales Budget is the estimation and projection of sales for a particular period of time.

Production Budget shows the quantities of units that a company must produce to meet the budgeted sales and inventory.

To Prepare: The sales budget and production budget of Incorporation S.

Explanation

Solution:

(a)

The following table shows the sales budget for Model R and Model T.

Incorporation S
Sales Budget
For the Month Ending June 30
Details Unit Sales Volume Unit Selling Price ($) Total Sales ($)
(A) (B) (A) × (B)
Model R:
  East Region 12,000 160 1,920,000
  West Region 14,000 160 2,240,000
Total 26,000 4,160,000
Model T:
  East Region 3,500 200 700,000
  West Region 4,000 200 800,000
Total 7,500 1,500,000
Total Revenue From Sales 5...

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