May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of the year:

Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $65,000. The company is now preparing a Merchandise Purchases Budget.
-The budgeted purchases for July are:

Question

May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of the year:

Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $65,000. The company is now preparing a Merchandise Purchases Budget.
-The budgeted purchases for July are:

Quizplus · Accepted Answer

The budgeted purchases for July are given as $40,000 + $10,050 + $6,000 + $7,000 = $63,050, so option B is the correct choice.

May Corporation, a Merchandising Firm, Has Budgeted Sales as Follows