Question

A sporting equipment store expects to purchase $7,800 of ski boots in October. The store had $3,800 of ski boots in merchandise inventory at the beginning of October, and expects to have $2,800 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?

Answer 1

Cost of goods sold = $8,800

Step-by-step explanation:

The cost of goods is represents amount incurred to make available what has been sold. It is computed as follows:

Cost of goods sold = opening stock + purchases - closing inventory

It is useful to determine the cost of goods so as to calculate the gross profit margin. The gross profit is the sales revenue less cost of goods sold.

So we can compute same for the sporting equipment store as follows:

Cost of goods sold = 3,800 + 7,800 - 2,800

= $8,800

Cost of goods sold = $8,800