Question

The mason merchandise company has budgeted $40,000 in sales for the month of december. the company's cost of goods sold is 25% of sales. if the company has budgeted to purchase $18,000 in merchandise during december, what is the budgeted change in inventory levels over the month of december?

a) $18,000 increase.
b) $13,000 increase.
c) $15,000 increase.
d) $8,000 increase.

Answer 1

The budgeted change in inventory levels for the Mason Merchandise Company in December is an $8,000 increase, calculated by subtracting the cost of goods sold ($10,000) from the budgeted merchandise purchases ($18,000).

Step-by-step explanation:

The Mason Merchandise Company has budgeted $40,000 in sales for December. The cost of goods sold (COGS) is 25% of sales, which means COGS will be $40,000 * 25% = $10,000. If the company is planning to purchase $18,000 in merchandise, we can calculate the budgeted change in inventory levels by subtracting the COGS from the amount of merchandise purchased.

Budgeted purchase: $18,000
Budgeted COGS: $10,000
Budgeted change in inventory: $18,000 - $10,000 = $8,000

Therefore, the budgeted change in inventory levels for the month of December would be an $8,000 increase, which corresponds to option d).