Use the information below to answer the following questions.
Saddle Company, a leather manufacturer, has a sales budget of $500,000 for February. The cost of sales is estimated to be 35% of sales. All materials purchased by Saddle Company are paid for in the month following the purchase. The beginning inventory for February is $10,000, and an ending inventory of $11,000 is desired. The trade payables balance at the beginning of February is $88,000.
-Refer to the information above. The cost of sales for February is expected to be:
A) $175,000
B) $197,000
C) $176,000
D) $186,000

Question

Quizplus · Accepted Answer

The cost of sales for February is calculated as 35% of the sales budget of $500,000, which equals $175,000 (0.35 * $500,000).

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