Question

om/courses/36019/assignments/3780467 My Converte Synced to Gradebook Mon Feb 24,2020,5:12.45 PM (America/New York-05.000 < Prev Question 4 View Policies 0.43/1 Show Attempt History Current Attempt in Progress Waterway Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians Vanessa Aaron, the company's sales manager, prepared the following sales forecast for 2018. The forecasted sales prices include a increase in the cost price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices. art Acoustic guitar sales Electric guitar sales Sales Price $1.250 $2,380 1"Quarter 210 420 2nd Quarter 300 340 3 Quarter 300 300 4 Quarter 305 360 Your answer is correct. Prepare Waterway's sales budget for 2018. Sales Budget 3 Quarter 4 Quarter Annu 1st Quarter 2nd Quarter Acoustic:

Answer 1

Production Budget in Units for Acoustic Guitars
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Annual
A. Budgeted unit sales	210	300	300	305	1,115
B. Budgeted ending inventory	120	120	122	96	96
C. Total units required (A+b)	330	420	422	401	1,211
D. Beginning inventory	30	120	120	122	30
E. Budgeted production (C-D)	300	300	302	279	1,181

Working Note: Calculation of Ending Inventory :

Actual inventory on December 31, 2017 = 30 units

Desired inventory on December 31, 2017 = 84 units

As we know, desired inventory is based on the following quarter’s sales

Following quarter’s sales (1^st quarter of 2018) = 210 units

So, Ending inventory percentage = (Desired Inventory / Next Quarter Sales) × 100

= (84 units / 210 units) × 100

= 0.40 × 100 = 40%

So, Ending inventory on 4^th quarter of 2018 = Sales of 1^st quarter of 2019 × 40%

= 240 units × 40%

= 96 units