Answer :
Given Information:Budgeted hammers to be sold = ?Sales price per hammer = ?Total sales = ?Desired hammers in ending inventory = ?Next quarter budgeted hammer sales = ?Ratio of inventory to future sale = ?
Explanation:Budgeted hammers to be sold = xSales price per hammer = $yTotal sales = (x * $y)Desired hammers in ending inventory = zNext quarter budgeted hammer sales = aThe ratio of inventory to future sale = bTo calculate the required value for the given question, we will use the formulae of total sales and the inventory equation, i.e.,Inventory at the end = Desired inventory level + Sales in the quarter - Actual Inventory level at the end.Using these formulae, we have:Let's assume that we have budgeted to sell 100 hammers this quarter, and we want to keep 20 hammers in the ending inventory. Sales price per hammer is $20, and we also need to budget for next quarter sales. Our next quarter sales forecast is 50 hammers. Calculate the Total sales and the ratio of inventory to future sales.So,Budgeted hammers to be sold = 100Sales price per hammer = $20Total sales = 100 * $20 = $2000Desired hammers in ending inventory = 20Next quarter budgeted hammer sales = 50Ratio of inventory to future sale = 2 (as we want to keep twice the inventory level of sales next quarter)Inventory at the end = Desired inventory level + Sales in the quarter - Actual Inventory level at the end20 = 20 + 100 - Actual Inventory level at the endActual Inventory level at the end = 100 - 20 = 80Ratio of inventory to future sales = 2 = Desired inventory level / Next quarter budgeted hammer sales2 = 20 / Next quarter budgeted hammer salesNext quarter budgeted hammer sales = 20 / 2 = 10The next quarter budgeted hammer sales are 10. Therefore, the Total sales and the ratio of inventory to future sales is $2000 and 2 respectively.
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