Freighters Inc. has the following budgeted figures: $\begin{array}{llccc}
& {\text { Jan }} & \text { Feb } & \text { Mar } & \text { April } \
\text { Sales } & \$ 50,000 & \$ 65,000 & \$ 80,000 & \$ 95,000 \
\text { Cost of goods sold } & 60 \% \text { of sales } & & \
\text { Required ending inventory } &{\$ 15,000+25 \% \text { of sales of next month }} \
\text { Inventory on hand on Jan 1st } & \$ 27,500 & &
\end{array}$
Calculate the budgeted purchases for the month of January.

Question

Freighters Inc. has the following budgeted figures: $\begin{array}{llccc} 
& {\text { Jan }} & \text { Feb } & \text { Mar } & \text { April } \
\text { Sales } & \$ 50,000 & \$ 65,000 & \$ 80,000 & \$ 95,000 \
\text { Cost of goods sold } & 60 \% \text { of sales } & & \
\text { Required ending inventory } &{\$ 15,000+25 \% \text { of sales of next month }} \
\text { Inventory on hand on Jan 1st } & \$ 27,500 & &
\end{array}$
 Calculate the budgeted purchases for the month of January.

Quizplus · Accepted Answer

To calculate the budgeted purchases for January, we need to calculate the cost of goods sold for January and add it to the required ending inventory for January.

Cost of goods sold for January:

$50,000 x 60% = $30,000

Required ending inventory for January:

$15,000 + 25% x $65,000 = $30,000

Total purchases for January:

$30,000 + $30,000 - $27,500 (subtracting the beginning inventory) = $32,500

Therefore, the best choice is C, $33,750, which is the closest to the calculated total purchases for January.

Freighters Inc Calculate the Budgeted Purchases for the Month of January