Question

A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. Budgeted ending inventory is 10% of the next month's sales. What is the budgeted cost of purchases for January?

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. The budgeted ending inventory is 10% of the next month's sales.

January:

Sales= 20,000*3= 60,000

Ending inventory= 25,000*0.10*3= 7,500

Total= $67,500