Caravan Corporation has the following information: $\begin{array}{lr}
\text { Month } & \text { Budgeted Sales } \
{may } & \$ 46,000 \
\text { June } & 50,000 \
\text { July } & 52,000 \
\text { August } & 48,000
\end{array}$ The cost of goods sold percentage is 70% and the desired inventory level is 25% of next month's sales._____ was the beginning inventory for May.
A)$8,050
B)$4,025
C)$12,075
D)None of these answers is correct

Question

Quizplus · Accepted Answer

The correct answer is A. The beginning inventory for May is $8,050. This can be calculated by taking 25% of the budgeted sales for June, which is $50,000, and then multiplying that number by 70%, which is the cost of goods sold percentage. This gives us $8,750. We then subtract this number from the budgeted sales for May, which is $46,000, to get the beginning inventory for May, which is $8,050.

Caravan Corporation Has the Following Information The Cost of Goods Sold Percentage Is 70% and the