Question

Answer the following questions using the information below:

The following information pertains to the January operating budget for Casey Corporation a retailer:

Budgeted sales are $200,000 for January
Collections of sales are 50% in the month of sale and 50% the next month
Cost of goods sold averages 70% of sales
Merchandise purchases total $150,000 in January
Marketing costs are $3,000 each month
Distribution costs are $5,000 each month
Administrative costs are $10,000 each month

*36) For January, budgeted gross margin is ________.*
A) $100,000
B) $140,000
C) $60,000
D) $50,000

Answer 1

The budgeted gross margin for January is $60,000.

Step-by-step explanation:

To calculate the budgeted gross margin for January, we need to determine the cost of goods sold (COGS) and subtract it from the budgeted sales. Given that the COGS averages 70% of sales, we can calculate it as 0.7 multiplied by the budgeted sales:

COGS = 0.7 * $200,000 = $140,000

Then, the budgeted gross margin is obtained by subtracting the COGS from the budgeted sales:

Budgeted gross margin = Budgeted sales - COGS

Budgeted gross margin = $200,000 - $140,000 = $60,000

Therefore, the budgeted gross margin for January is $60,000.