The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December.The company's cost of goods sold is 30% of sales.If the company has budgeted to purchase $18,000 in merchandise during December,then the budgeted change in inventory levels over the month of December is:

Question

Quizplus · Accepted Answer

The budgeted cost of goods sold is $40,000 x 30% = $12,000. The budgeted change in inventory levels is the budgeted cost of goods sold minus the budgeted purchases, or $12,000 - $18,000 = -$6,000. A negative change in inventory levels indicates a decrease in inventory, so the correct answer is B) $10,000 decrease.

The Willsey Merchandise Company Has Budgeted $40,000 in Sales for the Month