Fosnight Enterprises prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
What is the desired ending inventory on May 31?

Question

Fosnight Enterprises prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
What is the desired ending inventory on May 31?

Quizplus · Accepted Answer

D)
Sales = 100% - 30% Gross Profit = 70% Cost of Goods Sold (CGS)
Now: June Sales $14,000 × 70% = 9,800 (CGS)× 20% = $1,960

Fosnight Enterprises Prepared the Following Sales Budget