Marty\'s Merchandise has budgeted sales as follows for the second quarter of the

Question

Marty's Merchandise has budgeted sales as follows for the second quarter of the year:
April................ 30,000 units
May................ 60,000 units
June................ 50,000 units


The company wants to maintain a monthly ending merchandise inventory equal to 20% of the budgeted sales for the following month. The inventory on March 31 was below this target and was only 2,000. The company is now preparing a Merchandise Purchases Budget for April, May, and June.


The desired beginning inventory for June is:
Answer

A. 10,000

B. 6,000

C. 14,000

D. 12,000

Explanation / Answer

Beginning inventory of a month is same as ending inventory of last month. S

April May June
Budget Sales Units 30,000 60,000 50,000
(less) Beginning Inventory 2,000 12,000 10,000
Ending Inventory (20% of next month) 12,000 10,000

Beginning Inventory for June is 10,000 units

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