Clare purchases a single product for $15 and sells it for $30.Forecasted sales for the next three months are July 4,000 units,August 6,000 units,September 7,500 units.Clare's policy is to have an ending inventory of 40% of the next month's sales needs on hand.July 1 inventory is projected to be 1,500 units.What are budgeted purchases in units for August?
A)6,600 units
B)10,400 units
C)5,400 units
D)600 units

Question

Quizplus · Accepted Answer

For August, Clare needs to have an ending inventory of 40% of September's sales (7,500 units), which equals 3,000 units. The total needed for August is the sum of August sales (6,000 units) and the ending inventory for August (3,000 units), totaling 9,000 units. Subtracting the beginning inventory for August (which is the ending inventory of July, also 40% of August's sales, or 2,400 units) from this total gives the budgeted purchases for August: 9,000 units - 2,400 units = 6,600 units.

Clare Purchases a Single Product for $15 and Sells It