Mountaineer Company expects to sell 8,500 units for $165 each for a total of $ 1

Question

Mountaineer Company expects to sell 8,500 units for $165 each for a total of $ 1,402,500 in January and 2,800 units for $ 185 each for a total of $ 518,000 in February. The company expects cost of goods sold to average 70?% of sales? revenue, and the company expects to sell 4,300 units in March for $280 each. Mountaineer?'s target ending inventory is $ 16,000 plus 40?% of the next? month's cost of goods sold. Prepare Mountaineer?'s ?inventory, purchases, and cost of goods sold budget for January and February.

costs of goods sold

plus: desired ending merchandise inventory

total merchandise inventory required

less:begining merchandise inventory

budgeted purchases

Explanation / Answer

Mountaineer Company Inventory, Purchases, and Cost of Goods Sold Budget Two months Ended January 31 and February 28 January February Marach Sales in units 8,500 2,800 4,300 Sales price $165 $185 $280 Sales in dollars $1,402,500 $518,000 $1,204,000 Percentage of cost of goods sold 70% 70% 70% Cost of goods sold $981,750 $362,600 $842,800 Plus: Desired ending merchandise inventory $161,040 $353,120 Total merchandise inventory required $1,142,790 $715,720 Less: Beginning merchandise inventory $408,700 $161,040 Budgeted purchases $734,090 $554,680

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