Question

The following information pertains to the January operating budget for Casey Corporation. ·Budgeted sales for January $100,000 and February $200,000 -Collections for sales are 60% in the month of sale and 40% the next month Gross margin is 30% of sales Administrative costs are $10,000 each month · Beginning accounts receivable is $20,000 -Beginning inventory is $14,000 -Beginning accounts payable is $60,000 (All from inventory purchases) Purchases are paid in full the following month Desired ending inventory is 20% of next month's cost of goods sold (COGS) For January, budgeted cost of goods sold is $20,000 $30,000 $40,000 None of these answers are correct

Answer 1

Answer

• January’s sale = $ 100,000
• Gross Profit for January = $ 100000 x 30% = $ 30,000
• Cost of Goods Sold (COGS) = Sales – Gross Profit
  = $ 100000 – 30000
  = $ 70,000
• Correct Answer = Option #4: None of these answers are correct.