Question

Cool Logos buys logo-imprinted merchandise and then sells it to university bookstores. Sales are expected to be $2,006,000 in September, $2,200,000 in October, $2,376,000 in November, and $2,570,000 in December. Cool Logos sets its prices to earn an average 40% gross profit on sales revenue. The company does not want inventory to fall below $425,000 plus 10% of the next month's cost of goods sold. Prepare an inventory, purchases, and cost of goods sold budget for the months of October and November. Cool Logos Inventory, Purchases, and Cost of Goods Sold Budget For Months of October and November October November Cost of goods sold Plus: Desired ending inventory Total inventory required Less: Beginning inventory Purchases

Answer 1

Cool Logos Inventory, Purchases and Cost of Goods Sold Budget For Months of Ocboter and November Workings September October November December September October November Cost of goods sold $ 1,203,600 $ 1,320,000 $1,425,600 $ 1,542,000 ($ 2,006,000 * 60% ($ 2,200,000 * 60%) ($ 2,376,000 * 60%) Plus: Desired ending inventory $ 557,000 $ 567,560 $ 579,200 ($ 425,000 + ($ 1,320,000 * 10%) ($ 425,000 + ($ 1,425,600 * 10%) ($ 425,000 + ($ 1,542,000 * 10%) Total inventory required $ 1,887,560 $ 2,004,800 Less: Beginning inventory $ 557,000 $ 567,560 Purchases $ 1,330,560 $ 1,437,240 December ($ 2,570,000 * 60%)