Question

Techno Company sells mobile phones worldwide. The company expects to sell 4100 comma 100 mobile phones for $ 185 each in January and 3 comma 800 mobile phones for $ 220 each in February. All sales are cash only. Techno expects cost of goods sold to average 50 % of sales revenue. The company expects to sell 4 comma 600 mobile phones in March for $ 280 each. Techno's target ending inventory is $ 9 comma 000 plus 50​% of the next​ month's cost of goods sold. 1. Prepare the sales budget for January and February. 2. Prepare the​ company's cost of goods​ sold, inventory, and purchases budget for January and February.

Answer 1

See the explanation below.

Step-by-step explanation:

Note: The 4,100 correct units for January is used instead of the mistakenly written one in the question.

1. Prepare the sales budget for January and February.

January sales revenue budget = 4,100 * $220 = $902,000

February sales revenue budget = 3.800 * $220 = $836,000

2. Prepare the​ company's cost of goods​ sold

Cost of good sold

January cost of good sold budget = $902,000 * 50% = $451,000

February cost of good sold budget = $836,000 * 50% = $418,000

Inventory

March sales revenue budget = 4.600 * $280 = $1,288,000

March cost of good sold budget = $1,288,000 * 50% = $644,000

January ending inventory = $9,000 + (50% * $418,000) = $218,000

February ending inventory = $9,000 + (50% * $644,000) = $331,000

Purchase

Beginning inventory + Purchases - ending inventory = cost of good sold

Purchases = Cost of good - Beginning inventory + Ending inventory

January purchases budget = $451,000 - 0 + $218,000 = $699,000

February purchases budget = $418,000 - $218,000 + $331,000 = $531,000