A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. Budgeted ending inventory is 10% of the next month's sales. What is the budgeted cost of purchases for January?

Question

Cole Landry

Business

14 August, 08:39

A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. Budgeted ending inventory is 10% of the next month's sales. What is the budgeted cost of purchases for January?

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Hayley Beard · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. The budgeted ending inventory is 10% of the next month's sales.

January:

Sales = 20,000*3 = 60,000

Ending inventory = 25,000*0.10*3 = 7,500

Total = $67,500