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Lacombe Corporation is planning its master budget for 20X5. It anticipates that it will sell 500,000 units of its product in 20X5. The company also wants to increase its inventory by an additional 10,000 units at the end of the year in anticipation of a 10% increase in sales during 20X6 All sales of the company are on credit, and the company expects to collect 95% of its sales during the year of sale plus 90% of its beginning balance of accounts receivable. The beginning balance for 20X5 for the companys accounts receivable is $125,000. In addition, the company will pay for 90% of its 20X5 purchases in 20X5 plus pay the beginning accounts payable balance (used only for merchandise purchases) for 20X5 of $75,000. The company has budgeted selling and administrative expenses for 20X5 in the following amounts: fixed, $350,000, which includes S25,000 of depreciation; and variable, 8% of total sales for the year, which includes a bad debt expense of 0.5% of sales. All expenses requiring the payment of cash are paid for in the year they are incurred. Each unit of product is sold for S3.00 each and the company's cost of goods sold is 60% of its sales. The company will begin 20X5 with an inventory of 30,000 units, all purchased at the same price that the company expects to pay in 20X5 5. How much will the sales budget show for total sales for 20X5? (a) S 900,000 (b) $1,500,000 (c) $1,530,000 (d) $1,440,000 6 What number of units will the company have to purchase in 20X5 in order to meet its demand and required inventory levels? (a) 510,000 (b) 500,000 (c) 520,000 (d) 480,000

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