Michael Company has a sales budget for next month of $300,000.Cost of goods sold is expected to be 50% of sales.All units are paid for in the month following purchase.The beginning inventory is $10,000 and an ending inventory of $12,000 is desired.Beginning accounts payable is $76,000.The purchases for next month are ________.
A) $138,000
B) $140,000
C) $150,000
D) $152,000

Question

Quizplus · Accepted Answer

The cost of goods sold is expected to be 50% of sales, which means the total cost of goods sold would be $300,000 x 0.5 = $150,000.

To calculate the purchases, we need to determine the change in inventory.

Ending inventory = Beginning inventory + purchases - cost of goods sold

$12,000 = $10,000 + purchases - $150,000

$152,000 = purchases

Therefore, the purchases for next month are $152,000.

The answer is D.

Michael Company Has a Sales Budget for Next Month of $300,000.Cost