Freighters Ltd has the following budgeted figures:
$$\begin{array} { | l | l | l | l | l | }
\hline & \text { January } & \text { February } & \text { March } & \text { April } \
\hline \text { Sales } & \$ 57,500 & \$ 63,000 & \$ 89,000 & \$ 94,000 \
\hline \text { Cost of sales } & 50 \% \text { of sales } & & & \
\hline \text { Required } & \$ 20,000 + 25 \% & & & \
\text { ending } &
\text { of next month's } \
\text { inventory }
&\text {sales} & & \
\hline \text { Inventory on } & & & & \
\text { hand on 1 Jan } & \$ 27,500 & & & \
\hline
\end{array}$$
Calculate the budgeted purchases for the month of January.
A) $37,000
B) $7000
C) $35,750
D) $64,500

Question

Freighters Ltd has the following budgeted figures:
$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { January } & \text { February } & \text { March } & \text { April } \
\hline \text { Sales } & \$ 57,500 & \$ 63,000 & \$ 89,000 & \$ 94,000 \
\hline \text { Cost of sales } & 50 \% \text { of sales } & & & \
\hline \text { Required } & \$ 20,000 + 25 \% & & & \
\text { ending } &
\text { of next month's } \
\text { inventory }
&\text {sales} & & \
\hline \text { Inventory on } & & & & \
\text { hand on 1 Jan } & \$ 27,500 & & & \
\hline
\end{array}$$
Calculate the budgeted purchases for the month of January.
A) $37,000
B) $7000
C) $35,750
D) $64,500

Quizplus · Accepted Answer

Cost of sales for January = 50% of $57,500 = $28,750Required ending inventory for January = $20,000 + 25% of February sales = $20,000 + 25% of $63,000 = $31,500Budgeted purchases for January = Required ending inventory for January - Inventory on hand on 1 Jan = $31,500 - $27,500 = $4,000

Freighters Ltd Has the Following Budgeted Figures Calculate the Budgeted Purchases for the Month of January