Jessica has just launched an online store where she will be selling high-end pet apparel. She wants to start this business off on the right foot and is creating a Cost of Goods Sold Budget for the month of September of this year. She has gathered as much information as possible and is ready to get to work. She made her first purchase last month in the amount of $165 but did not have any sales. She will be purchasing 500 units from a supplier with a price of $2.48 per unit. She believes she will end the month with Merchandise Inventory in the amount of $120. How much will Jessica's Cost of Goods Sold Budget be for September?

Question

Quizplus · Accepted Answer

The formula needed to calculate the Budgeted Cost of Goods Sold is Beginning Merchandise Inventory + Purchases F1F1F1S1?F1F1F10 Ending Merchandise Inventory. Although Jessica is launching her business this month, it must be noted that she would have beginning inventory that had been purchased during the previous month. Start with Beginning Merchandise Inventory of $165, add her Purchases of $1,240 ($2.48 per unit × 500), and subtract her Ending Merchandise Inventory of $120 to arrive at a Budgeted Cost of Goods Sold of $1,285.

Jessica Has Just Launched an Online Store Where She Will