Answer:
Pearson Corp
Budgeted Sales Revenue for the third quarter of 2016:
The budgeted sales revenue = $88,200 (441 x $200)
Explanation:
If First Quarter Sales = 400 units
Second Quarter Sales = 420 units (400 x 1.05)
Therefore, Third Quarter Sales = 441 units (420 x 1.05)
Another way to work it out is to compound the rate for two years:
(1.05)ⁿ = (1.05)∧2 = 1.1025
Sales in first quarter = 400 x $200 = $80,000
Sales in third quarter = $80,000 x 1.1025 = $88,200
The compounding of the rate of increase yield a compound factor that can be applied to the value of the sales in the first quarter to arrive at a sales value for the third quarter without working out the sales value for the second quarter also.
