A. Wally widgets will start operating from January 1st. The company sells a single product and expects first month sales to be 10,000 units, with sales increasing to 250 units per month thereafter. the sale price of the product is $12.00.

The company has a 50% gross margin on its products and pays a 10% commission on sales.

-What is the budget assumption for the first month's sales in units, sales growth per month, sales price per unit, gross margin, commission.

B.  Wally's Widgets expects the ending inventory balance at the end of any month to be 60% of the expected sales for the following month. The company wants to maintain a minimum cash balance of $20,000 at all times.

The company has access to a line of credit that incurs an interest rate of 12% per year.

-What is the budget assumption for ending inventory, minimum cash balance, and interest rate.

Answer rating: 100% (QA)

A Budget Assumptions for Wallys Widgets 1 First Months Sales in Units 100... View the full answer