Question

Budgeted unit sales for 2019 are as follows: 1st quarter - 10,000; 2nd quarter - 12,000; 3rd quarter - 14,000; 4th quarter - 16,000 The ending inventory of finished goods for each quarter equals 25% of next quarter's projected unit sales. Beginning inventory was 2,000 units. Scheduled purchases in units for the third quarter would be: 13,500 units. 14,500 units. 15,500 units. 18,000 units. None of the above.

Answer 1

1)

Scheduled purchases

= Budgeted sales + Desired ending inventory - Beginning inventory

= 14,000 + (16,000*25%) - (14,000*25%)

= 14,000 + 4,000 - 3,500

= 14,500

Option B is the answer

2)

As depreciation is a non cash expense, it finds no place in cash budget

Option D is the answer