Cameroon Corp. manufactures and sells electric staplers for $15.20 each. If 10,000 units were sold in December, and management forecasts 4% growth in sales each month, the dollar amount of electric stapler sales budgeted for February should be:a) $152,000b) $164,403c) $177,818d) $158,080e) $170,979

The correct answer is:

$164,403 (b)

Explanation:

First of all let us lay out the information given clearly:

unit selling price = $15.20

number of units sold in December = 10,000 units

sale's growth rate per month = 4% = 0.04

Next, let us find the number of units sold in February, using the sales growth rate.

January sales = December sales + 4% increase

4% of December sales = 0.04 × 10,000 = 400 units

∴ January sales = 10,000 + 400 = 10,400 units

February sales = January sales + 4% increase

4% increase of January sales = 0.04 × 10,400 = 416 units

∴ February sales = 10,400 + 416 = 10,816

Next we will calculate the budgeted sales in amount for February, by multiplying the number of unit budgeted by the selling price per unit, as follows:

Budgeted sales in February = Number of units × selling price

= 10,816 × 15.20 = $164,403.2

= $164,403 ( to the nearest dollars)