Question

Marty's Merchandise has budgeted sales as follows for the second quarter of the year: April $ 30,000 May $ 60,000 June $ 50,000 Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending inventory equal to 120% of the cost of goods sold for the following month. The inventory on March 31 was below this target and was only $22,000. The company is now preparing a Merchandise Purchases Budget for April, May, and June. The desired beginning inventory for June is: Multiple Choice $42,000 $35,000 $50,000 $38,000

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

Marty's Merchandise has budgeted sales as follows for the second quarter of the year: April $ 30,000 May $ 60,000 June $ 50,000

The Cost of goods sold is equal to 70% of sales.

The company wants to maintain a monthly ending inventory equal to 120% of the cost of goods sold for the following month. The inventory on March 31 was below this target and was only $22,000.

May:

Inventory for June= (50.000*0.7)*1.20= $42,000