Yoshino, Inc., a merchandising company, has the following budgeted figures:

Jan Feb Mar April

Sales $51,900 $69,000 $80,000 $91,000

Cost of goods sold 50% of sales

Required ending inventory $15,000 + 20% of next month's sales

Inventory on hand on Jan 1 $27,000

1. Calculate the ending merchandise inventory for the month of March.

A) $40,000

B) $33,200

C) $27,750

D) $55,000

B

Explanation:

It is said that the required ending inventory for the month is $15000 and 20% of the next month's sales.

We are considering the month of march here, therefore the ending merchandise inventory is $15000 - and 20% of April's sales.

Given:

April's sales = $91,000

Hence, 20% of April's sales = 0.2*91000 = $18200

Hence, ending merchandise inventory for March = 15000 + 18200 = $33,200