Question

​Tuscarora, Inc., a merchandising​ company, has the following budgeted​ figures:

	Jan	Feb	Mar	April
Sales	$54,400.00	$64,000.00	$88,000.00	$94,000.00
Cost of goods sold	60​% of sales
Required ending inventory	$15,000.00 ​+25​%of next​month's sales
Inventory on hand on Jan 1	$27,000.00

Calculate the budgeted purchases for the month of January.

and also,

​Arianell, Inc. reports the following information for​ August:

Sales Revenue	$800,000
Variable Cost of Goods Sold	170,000
Fixed Cost of Goods Sold	45,000
Variable Selling and Administrative Costs	150,000
Fixed Selling and Administrative Costs	60,000

Calculate the gross profit for August using absorption costing.

Answer 1

1)

Cost of goods sold ($ 54,400 * 60%)	$ 32,640
Less: Beginning Inventory [Given]	$(27,000)
Add: Ending Inventory ($ 15,000 + ($ 64,000 * 60% * 25%)	$ 24,600
Purchases	$ 30,240

2)

Particular	Amount
Sales Revenue	$ 800,000
Less: Cost of Goods Sold
Variable COGS	$ 170,000
Fixed COGS	$ 45,000
Gross profit	$ 585,000