Miller Company has the following data:
The gross profit rate is 40 percent, and the inventory at the end of December was $72,000. Desired inventory levels are 30 percent of next month's sales.
-The desired ending inventory for March is

Question

Miller Company has the following data:
  The gross profit rate is 40 percent, and the inventory at the end of December was $72,000. Desired inventory levels are 30 percent of next month's sales.
-The desired ending inventory for March is

Quizplus · Accepted Answer

The desired ending inventory for March is $86,400 because the company wants to have 40% of the next month's COGS on hand at the end of the current month. The COGS for April is $216,000, so the desired ending inventory for March is 40% of $216,000, which is $86,400.

Miller Company Has the Following Data