Use the information below to answer the following question(s).
Peabody 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.
-A tire store purchased $3,800 of tires in September. The store had $1,500 of tires on hand at the beginning of September, and expected to have $1,300 of tires at the end of September to cover part of anticipated October sales. What is the budgeted cost of goods sold for September?

Question

Use the information below to answer the following question(s).
Peabody 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.
-A tire store purchased $3,800 of tires in September. The store had $1,500 of tires on hand at the beginning of September, and expected to have $1,300 of tires at the end of September to cover part of anticipated October sales. What is the budgeted cost of goods sold for September?

Quizplus · Accepted Answer

The budgeted cost of goods sold for September can be calculated as follows:

Beginning inventory = $1,500
Purchases = $3,800
Total available = $5,300
Ending inventory = $1,300

Cost of goods sold = Beginning inventory + Purchases - Ending inventory
Cost of goods sold = $1,500 + $3,800 - $1,300
Cost of goods sold = $4,000

Use the Information Below to Answer the Following Question(s)