Question

Coronet Company provided the following information related to its inventory sales and purchases for December 2013 and the first quarter of 2014: Dec. 2013 Jan. 2014 Feb. 2014 Mar. 2014 (Actual) (Budgeted) (Budgeted) (Budgeted) Cost of goods sold $47,000 $77,000 $97,000 $67,000 Desired ending inventory levels are 32% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2014 would be:

Answer 1

Purchase for February 87,400

Step-by-step explanation:

February purchase:

for February Sales 97,000

desired ending inventory 23% of next month

23% of March

23% of 67,000 = 21,440

Total requirement 118,440

Beginning Invnetory

23% of current month

23% of 97,000 = (31,040)

Purchase for February 87,400

Notes:

We add the desired ending inventory and the COGS for february as those would be the total need for inventory.

Then we subtract the beginning inventory because those units are in the company, so no need to purchase those.