Mfl sales expects to sell 400 units of product a and 360 units of product b each day at an average price of $20 for product a and $26 for product b. the expected cost for product a is 36% of its selling price and the expected cost for product b is 59% of its selling price. mfl sales has no beginning inventory, but it wants to have a six-day supply of ending inventory for each product. compute the budgeted cost of goods sold for the next (seven-day) week.

budgeted cost of goods sold $58817

Explanation:

given data

Product A sell = 400 units

Product B sell = 360 units

Product A average price = $20

Product B average price = $26

Product A  expected cost = 36 %

Product B expected cost = 59 %

solution

as per cost of goods sold budget for 7 days

particular                                          

(1) sales revenue                    

( per day sale unit × 7 days ) × price

so for  product A  = 400×20×7 = $56000

so for  product B = 360×26 ×7 = $65520

total is $121520

and

(2) cost of good sold is (sale value ) 36% and 59%

so for  product A  = $56000 × 36% = $20160

so for  product b  = $65520 × 59% = $38656.80

total is 58816.80 = $58817

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