Question

Sales are budgeted at $350,000. All sales are on account and a provision for bad debts is made for each month at two percent of sales for the month. Inventory was $101,000 on April 30; an inventory increase of $14,000 is planned for May 31. All inventory is marked to sell at cost plus 40 percent. Estimated cash disbursements for selling and administrative expenses for the month are $65,000. Depreciation for May is projected at $7,700. Brownsville's budgeted cost of goods sold (CGS) in May is:

Answer 1

Cost of goods sold= 250,000

Step-by-step explanation:

We can calculate the cost of good sold based on the markup policy of the firm:

Sales price: cost + 40% over cost markup

sales price = cost ( 1 + 40%) = 1.4 cost

so we can calculate cost of good sold for May from the sales figure.

350,000 sales = 1.4 cost

350,000 / 1.4 = cost

Cost of goods sold= 250,000