Next Year's Sales Forecast Shows That 20,000 Units of Product

question 22

Multiple Choice

Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product A for the year would be:

• A) 22,400 units
• B) 20,400 units
• C) 20,000 units
• D) 12,200 units

---

Definitions:

Cost of Goods Sold

An expense representing the cost of purchasing raw materials and manufacturing the goods that a company sells during a specific period.

Product Costs

The costs directly associated with the production of goods, including raw materials, labor, and manufacturing overhead.

Work in Process Inventory

Refers to the value of items that are in the production process but have not yet been completed.

Merchandising Companies

Businesses that purchase goods in finished form for resale to consumers or other buyers without further processing.