Question

Apple Corporation provided the following information related to its inventory sales and purchases for December Year 1 and the first quarter of Year 2:

	Dec. Year 1				Jan. Year 2				Feb. Year 2				Mar. Year 2
	(Actual)				(Budgeted)				(Budgeted)				(Budgeted)
Cost of goods sold	$	37,000			$	67,000			$	87,000			$	57,000

Desired ending inventory levels are 27% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February Year 2 would be:

A. $86,400.

B. $105,120.

C. $65,100.

D. $78,900.

Answer 1

Correct Answer (D) $78900

Calculations

Budgeted purchases of inventory in February Year 2

Desired Closing Inventory($57000*27%)	$    15,390.00
Add: Cost of Goods Sold	$    87,000.00
	$ 102,390.00
Less: Opening Inventory(Jan closing Inventory )	$    23,490.00
Budgeted Purchases in February	$    78,900.00

Jan Closing inventory ($87000*27%)

$    23,490.00