Question

Jewelry Company has a sales budget for next month of $450,000. Cost of goods sold is expected to be 45 percent of sales. All goods are paid for in the month following purchase. The beginning inventory of merchandise is $20,000, and an ending inventory of $24,000 is desired. Beginning accounts payable is $206,500. The cost of goods sold for next month is expected to be:

$160,000

$202,500

$360,000

$406,000

Answer 1

The cost of goods sold for next month is expected to be $202,500

Step-by-step explanation:

Given that,

Sales budget = $450,000

Cost of Good sold = 45% of sales

Opening inventory = $20,000

Ending inventory = $24,000

Beginning accounts payable = $206,500

Since, in the given question, it is mentioned that the cost of good sold is 45% of sales.

So,

Cost of Goods Sold (COGS) = 0.45 × $450,000

= $202,500

Hence, the cost of goods sold for next month is expected to be $202,500

Note: we don't considered other things which is mentioned in the question.