Caskill Company forecasts $40 000 of sales in January, $38 000 in February, $30 000 in March, and $32 000 in April. Cost of sales is budgeted at 75% of sales. Caskill should have inventory on hand at the end of each month equal to $5 000 plus 20% of the following month's cost of sales. How much are budgeted purchases for March?

Question

Quizplus · Accepted Answer

Budgeted purchases for March = (Cost of sales for April x 20%) + (Ending inventory for March - Beginning inventory for March)= ($32,000 x 20%) + ($5,000 + $29,700 - $5,000)= $6,400 + $29,700= $22,800

Caskill Company Forecasts $40 000 of Sales in January, $38