Question

Mountaineer Company expects to sell 8,500 units for $165 each for a total of $ 1,402,500 in January and 2,800 units for $ 185 each for a total of $ 518,000 in February. The company expects cost of goods sold to average 70?% of sales? revenue, and the company expects to sell 4,300 units in March for $280 each. Mountaineer?'s target ending inventory is $ 16,000 plus 40?% of the next? month's cost of goods sold. Prepare Mountaineer?'s ?inventory, purchases, and cost of goods sold budget for January and February.

costs of goods sold

plus: desired ending merchandise inventory

total merchandise inventory required

less:begining merchandise inventory

budgeted purchases

Answer 1

Mountaineer Company
Inventory, Purchases, and Cost of Goods Sold Budget
Two months Ended January 31 and February 28
	January	February	Marach
Sales in units	8,500	2,800	4,300
Sales price	$165	$185	$280
Sales in dollars	$1,402,500	$518,000	$1,204,000
Percentage of cost of goods sold	70%	70%	70%
Cost of goods sold	$981,750	$362,600	$842,800
Plus: Desired ending merchandise inventory	$161,040	$353,120
Total merchandise inventory required	$1,142,790	$715,720
Less: Beginning merchandise inventory	$408,700	$161,040
Budgeted purchases	$734,090	$554,680