DGT Industries expects to sell 450 units of Product A and 400 units of Product B each day at an average price of $23 for Product A and $31 for Product B.The expected cost for Product A is 38% of its selling price and the expected cost for Product B is 60% of its selling price.DGT Industries has no beginning inventory,but it wants to have a four-day supply of ending inventory for each product.Compute the budgeted purchases for the next (seven-day)week.(Round the answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

C)
D) Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Cost of goods sold:
Product A: ($23 × 38%) × (450 units × 7 days) = $27,531
Product B: ($31 × 60%) × (400 units × 7 days) = $52,080
Total cost of goods sold: $27,531 + $52,080= $79,611
Desired ending inventory: (Daily sales × 4 days) × (Selling price × % expected cost)
Product A: (450 × 4) × ($23 × 38%) = $15,732
Product B: (400 × 4) × ($31 × 60%) = $29,760
Total Desired ending inventory: $15,732 + $29,760 = $45,492
Purchases: Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Product A: $27,531 + $15,732 - 0 = $43,263
Product B: $52,080 + $29,760 - 0 = $81,840
Total budgeted purchases: $43,263 + $81,840 = $125,103

DGT Industries Expects to Sell 450 Units of Product a and 400