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13 May, 12:59

Wallace Company provides the following data for next year: Month Budgeted Sales January $120,000 February 108,000 March 140,000 April 147,000 The gross profit rate is 35% of sales. Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for January

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  1. 13 May, 13:03
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    Total purchase = $55,420

    Explanation:

    Giving the following information:

    Wallace Company provides the following data for next year: Month Budgeted Sales January $120,000 February 108,000. Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost.

    The gross profit rate is 35% of sales.

    Cost of January = 120,000*0.65 = 78,000

    Purchase for Febraury = [ (108000*0.65) * 0.10] = 7,020

    Beginning inventory = 29,600 (-)

    Total purchase = $55,420
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