Viking Company has the following data: $$\begin{array} { l l }
\text { Month } & \text { Budgeted Sales } \
\text { January } & \$ 108,000 \
\text { February } & 132,000 \
\text { March } & 144,000 \
\text { April } & 120,000
\end{array}$$ The average mark- up on products is 40%, and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. _ is the desired ending inventory for February.

Question

Viking Company has the following data: $$\begin{array} { l l } 
\text { Month } & \text { Budgeted Sales } \
\text { January } & \$ 108,000 \
\text { February } & 132,000 \
\text { March } & 144,000 \
\text { April } & 120,000
\end{array}$$ The average mark- up on products is 40%, and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. _ is the desired ending inventory for February.

Quizplus · Accepted Answer

The desired ending inventory for February is 30% of March's sales at cost. March's sales are $144,000, and the cost is 100% - 40% = 60% of sales. So, $144,000 * 60% = $86,400 (cost of March's sales). 30% of $86,400 is $25,920.

Viking Company Has the Following Data The Average Mark- Up on Products Is 40%, and the }