Poster Artist Ltd, a retail store selling classic and rare marketing materials, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: $$\begin{array} { l l }
\text { Begirring irventory } & \$ 20,000 \
\text { Budgeted purchases } & 50,000 \
\text { Expected reverue } & 150,000 \
\text { Irflows of cash } & 120,000 \
\text { Support departments costs } & 30,000 \
\text { Total cash outflows } & 80,000
\end{array}$$ Poster Artist Ltd's budgeted gross profit for the next fiscal year will be:

Question

Poster Artist Ltd, a retail store selling classic and rare marketing materials, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: $$\begin{array} { l l } 
\text { Begirring irventory } & \$ 20,000 \
\text { Budgeted purchases } & 50,000 \
\text { Expected reverue } & 150,000 \
\text { Irflows of cash } & 120,000 \
\text { Support departments costs } & 30,000 \
\text { Total cash outflows } & 80,000
\end{array}$$ Poster Artist Ltd's budgeted gross profit for the next fiscal year will be:

Quizplus · Accepted Answer

To calculate the budgeted gross profit, we first need to determine the cost of goods sold (COGS). The beginning inventory is $20,000, and the budgeted purchases are $50,000, making the cost of goods available for sale $70,000 (20,000 + 50,000). The ending inventory is budgeted at 20% of the cost of goods available for sale, which is $14,000 (20% of $70,000). Thus, the COGS is $56,000 ($70,000 - $14,000). The expected revenue is $150,000, so the budgeted gross profit is $94,000 ($150,000 - $56,000).

Poster Artist Ltd, a Retail Store Selling Classic and Rare