Pacific Corporation assembles bicycles by purchasing various suppliers' frames, wheels, and other parts. The assembled bicycles are sold to mass retailers in the western part of the United States. Consider the following plans:

• The company plans to sell 40,000 bicycles during Month 1, 50,000 during Month 2, and 45,000 units for Month 3. The budgeted sales price is $200 per bicycle.
• The company expects to maintain finished goods inventories at 3% of the coming months sales needs and uses that expectation in establishing its budgets. (Assume this requirement will be met at the beginning of Month 1.)
• Each bicycle requires 2 wheels, which Pacific purchases from the manufacturer for $10 each. The planned beginning and ending materials inventories are 5% of the coming months production needs (with that target to have been met at the beginning of Month 1).

a. What is Pacifics budgeted sales revenue for Month 1? Show your calculations.

b. How many bicycles should Pacific plan to assemble (i.e., produce) during Month 1? Show your work.

c. How many wheels should Pacific plan to purchase during Month 1? What is the anticipated purchase cost? Show your work.

Answer rating: 100% (QA)

a To calculate Pacific Corporations budgeted sales revenue for Month 1 we need to multiply the planned sales quantity by the budgeted sales price per ... View the full answer