Tuscarora, Inc., a merchandising company, has the following budgeted figures: $\begin{array}{|l|l|l|l|l|}
\hline&\text {Jan } & \text { Feb } & \text { Mar } & \text { April }\
\hline \text { Sales } & \$ 57,300 & \$ 60,000 & \$ 83,000 & \$ 98,000 \
\hline \text { Cost of goods sold } & 50 \% \text { of sales } & & & \
\hline \text { Required ending inventory } & \begin{array}{l}
\$ 10,000+30 \% \text { of } \
\text { next month's sales }
\end{array} & & & \
\hline \text { Inventory on hand on Jan } 1 & \$ 30,000 & & &\
\hline
\end{array}$ Calculate the budgeted purchases for the month of January.

Question

Tuscarora, Inc., a merchandising company, has the following budgeted figures: $\begin{array}{|l|l|l|l|l|}
\hline&\text {Jan } & \text { Feb } & \text { Mar } & \text { April }\
\hline \text { Sales } & \$ 57,300 & \$ 60,000 & \$ 83,000 & \$ 98,000 \
\hline \text { Cost of goods sold } & 50 \% \text { of sales } & & & \
\hline \text { Required ending inventory } & \begin{array}{l}
\$ 10,000+30 \% \text { of } \
\text { next month's sales }
\end{array} & & & \
\hline \text { Inventory on hand on Jan } 1 & \$ 30,000 & & &\
\hline 
\end{array}$ Calculate the budgeted purchases for the month of January.

Quizplus · Accepted Answer

To calculate the budgeted purchases for January, we need to determine the cost of goods sold (COGS) for January, the required ending inventory for January, and use the beginning inventory for January. 1. COGS for January = 50% of January Sales = 50% of $57,300 = $28,650.2. Required ending inventory for January = $10,000 + 30% of February Sales = $10,000 + 30% of $60,000 = $10,000 + $18,000 = $28,000.3. Beginning inventory for January = $30,000 (given).Budgeted purchases for January = COGS for January + Required ending inventory for January - Beginning inventory for January = $28,650 + $28,000 - $30,000 = $26,650.

Tuscarora, Inc Calculate the Budgeted Purchases for the Month of January