Question 1 Max bought a ticket to the championship baseball game for $200. Someo

Question

Question 1

Max bought a ticket to the championship baseball game for $200. Someone approaches him outside the stadium and offers him $425 for his ticket. If Max decides to go to the game, instead of selling his ticket, how much does it cost Max to go to the game?

Question 2

Coronet Company provided the following information related to its inventory sales and purchases for December 2013 and the first quarter of 2014:

Desired ending inventory levels are 34% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2014 would be:

Dec. 2013 Jan. 2014 Feb. 2014 Mar. 2014 (Actual) (Budgeted) (Budgeted) (Budgeted)   Cost of goods sold $30,000 $60,000 $80,000 $50,000

Explanation / Answer

Question 1 - The cost of the ticket is $200 only if Max decides to go to the game. However there is an opportunity revenue of $225 ($425 - $200) which is being lost by not selling the ticket.

Question 2 -

Purchases is found as below

Dec 2013 Jan 2014 Feb 2014 Mar 2014 (Actual) (Budgeted) (Budgeted) (Budgeted) Cost of goods sold $30,000 $60,000 $80,000 $50,000 Desired ending stock (34% of next month) $20,400 $27,200 $17,000 Opening Stock $20,400 $27,200 (Closing of last month) Purchases for Feb 2014 $69,800 (COGS + ending stock - Opening stock)

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