Wallace Company provides the following data for next year: Month Budgeted Sales
ID: 2589664 • Letter: W
Question
Wallace Company provides the following data for next year:
Month
Budgeted Sales
January
$ 124 comma 000$124,000
February
112 comma 000112,000
March
133 comma 000133,000
April
144 comma 000144,000
The gross profit rate is
3030%
of sales. Inventory at the end of December is
$ 26 comma 600$26,600
and target ending inventory levels are
3030%
of next month's sales, stated at cost.
What is the amount of purchases budgeted for February?
Month
Budgeted Sales
January
$ 124 comma 000$124,000
February
112 comma 000112,000
March
133 comma 000133,000
April
144 comma 000144,000
Explanation / Answer
Answer:-The amount of purchases bedgeted for February is $82810.
Explanation :-
Gross profit rate = 30% of sales
Cost of goods sold =70% of sales
March month closing inventory =April month sale at cost (ie- Cost of goods sold) *30%
=($144000*70%)*30%
=$30240
Wallace Company Purchase Budget Particulars January Febuary March $ $ $ Estimated sales (a) 124000 112000 133000 Cost of goods sold (b=70%*a) 86800 78400 93100 Add:- Desired ending merchandise inventory (c) 78400*30% = 23520 93100*30% = 27930 100800*30%=30240 Less:-Desired opening merchandise inventory (d) 26000 23520 27930 Amount of purchases budgeted (e=b+c-d) 84320 82810 95410Related Questions
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