Question

To get the Beginning Inventory of Finished Goods on you budget for​ February, use: A. The...

To get the Beginning Inventory of Finished Goods on you budget for​ February, use:

A.

The Ending Inventory for each Month has to be given to you.

B.

The Ending Inventory of Finished Goods from January.

C.

The Beginning Inventory of Finished Goods from March.

D.

The Ending Inventory of Direct Material from January.

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Answer #1

Answer : Option B : The Ending Inventory of Finished Goods from January.

Explanation : Preceding month Ending Inventory will be current month beginning inventory, therefore January month Ending Inventory will be February month beginning inventory.

Reasons for other options incorrect :

Option A : In budgetary preparation desired ending inventory has to be calculated from next month sales , it won't be given for each month.

Option C : March beginning inventory will be February ending inventory not February beginning inventory, it's not correct to take it.

Option D : It's incorrect to take direct material for finished goods.

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