The managerial accountant at the Holly and Ivy Tree Store reported that the comp

Question

The managerial accountant at the Holly and Ivy Tree Store reported that the company anticipates sales of $600,000 in September and October, $625,000 in November, $635,000 in December, and note that the sales figure is $640,000 in January. The August sales revenue was equal to the September sales revenue. The managerial accountant establishes the prices at the Holly and Ivy Tree Store on its merchandise to ensure the company earns 45% gross profit on its sales. The managerial accountant expects the ending inventory at the store to equal 12% of the next month's cost of goods sold.

Compute the COSG, inventory, and purchases budget for October, November, and December

Explanation / Answer

Gross profit on sales = 45%

Cost of goods sold = 55%

Cost of goods sold budget

----------

Ending inventory at the store = 12% of the next month's cost of goods sold.

Inventory budget

----------

Purchases = Cost of goods sold + Ending inventory - Beginning inventory

Purchases budget

(39,600)

(600,000*55%*12%)

(41,250)

(625,000*55%*12%)

(41,910)

(635,000*55%*12%)

October November December Cost of goods sold 330,000 (600,000*55%) 343,750 (625,000*55%) 349,250 (635,000*55%)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.