What is the desired number of units in ending inventory at the end of the first quarter?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
BUDGETING
The following information was taken from Colleen’s Coatings budget for 2003.
Quarter Unit Sales
First 20,000
Second 16,000
Third 23,000
Fourth 25,000
Beginning inventory of 5,000 units reflects Colleen’s policy of maintaining an ending inventory
equal to 25% of the next quarter’s sales. Colleen anticipates selling 20,500 units during the first
quarter of 2004. The selling price per unit will remain at $16 throughout the budget period.
1. What is the desired number of units in ending inventory at the end of the first quarter?
A. 5,000
B. 4,000
C. 9,000
D. 7,000
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