Question

Smoothie vibes prepared the following sales budget.

month budgeted sales
march $4,000
april $11,000
may $14.000
june $10.000
The expected gross profit rate is 30% and the inventory at the end of february was $10.000. desired inventory levels at the end of the month are 10% of the next month's cost of goods sold. what is the budgeted cost of goods sold for may?
a. $4.200
b. $9.800
c. $3,000
d. $1.400

Answer 1

The budgeted cost of goods sold for May is $9,800, calculated as 70% of the budgeted sales for May, considering the given gross profit rate of 30%.

Step-by-step explanation:

To calculate the budgeted cost of goods sold for May, we first need to find out the cost of goods sold at the given gross profit rate of 30%. Since gross profit is the difference between sales and the cost of goods sold, we can calculate the cost by subtracting the gross profit from total sales. For May, with budgeted sales at $14,000, the cost of goods sold is 70% of the sales (as 100% - 30% = 70%). So, $14,000 × 70% = $9,800, which is the cost of goods sold for May.