Question

Trailer Company expects to sell 8,000 units for $175 each for a total of $1,400,000 in January and 2,000 units for $185 each for a total of $370,000 in February. The company expects cost of goods sold to average 50% of sales revenue, and the company expects to sell 4,400 units in March for $300 each. Trailer's target ending inventory is $20,000 plus 60% of the next month's cost of goods sold. Prepare Trailer's inventory, purchases, and cost of goods sold budget for January and February Trailer Company Inventory, Purchases, and cost of Goods Sold Budget Two months Ended January 31 and February 28 January February Cost of goods sold 8000 Plus: Desired ending merchandise inventory Total merchandise inventory required Less: Beginning merchandise inventory Budgeted purchases

Answer 1

Particulars Sales Febraury $ 370,000 March $1,320,000 $1,400,000 Total Calculating Budgeted Production Particulars January Febraury Cost of Goods sold@50% of Sales $ 700,000 $ 185,000 Add : Closing Inventory(20000+60%(COGS) $ 131,000 $ 416,000 Required units $ 831,000 $ 601,000 Less : Opening Inventory $ 440,000 $ 131,000 Purchases $ 391,000 $ 470,000 $ 861,000