Sander Enterprises prepared the following sales budget:

The expected gross profit rate is 40% 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 are the total purchases budgeted for April?

Question

Sander Enterprises prepared the following sales budget:

The expected gross profit rate is 40% 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 are the total purchases budgeted for April?

Quizplus · Accepted Answer

C)
Cost of Goods Sold = $13,000 × 60% = $7,800
Ending Inventory = $12,000 × 60% = 7,200 x 20% = $1,440
Beginning Inventory = $13,000 × 60% = 7,800 × 20% = $1,560
Now: CGS $7,800 + EI 1,440 - BI 1,560 = Purchases $7,680

Sander Enterprises Prepared the Following Sales Budget