19) White Marsh Company has prepared the following sales budget: Month Budgeted
ID: 2415454 • Letter: 1
Question
19) White Marsh Company has prepared the following sales budget:
Month
Budgeted Sales
March
$200,000
April
180,000
May
220,000
June
260,000
Cost of goods sold is budgeted at 60% of sales and the inventory at the end of February was $36,000. Desired inventory levels at the end of each month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?
A) $52,000
B) $26,400
C) $43,200
D) $31,200
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
Month
Budgeted Sales
March
$200,000
April
180,000
May
220,000
June
260,000
Explanation / Answer
Particulars
Feb
March
April
May
June
Sales
200,000
180,000
220,000
260,000
Beginning inventory
36,000
21,600
26,400
31,200
Cogs@ 60%
120,000
108,000
132,000
156,000
ending inentory @ 20% Next month COGS
36,000
21,600
26,400
31,200
-
Option D $31,200 correct
Particulars
Feb
March
April
May
June
Sales
200,000
180,000
220,000
260,000
Beginning inventory
36,000
21,600
26,400
31,200
Cogs@ 60%
120,000
108,000
132,000
156,000
ending inentory @ 20% Next month COGS
36,000
21,600
26,400
31,200
-
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