Question

Sander Enterprises prepared the following sales budget: Month March April May June Budgeted Sales $5000 137000 $14,000 $17.000 The expected gross profitrate is 10% and the inventory at the end of February was $13,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What are the total purchases budgeted for April? $11,520 $14,040 $11,880 $11,700

Answer 1

Correct answer------------$11,880

Working

	March	April	May	June
Sales	$      5,000.00	$    13,000.00	$       14,000.00	$    17,000.00
Cost of goods sold (90% of sales)	$      4,500.00	$    11,700.00	$       12,600.00	$    15,300.00

.

Cost of goods sold. Inventory and purchases Budget for April
	March	April	May
Cost of goods sold	$            4,500	$          11,700	$             12,600
Plus: Desired ending inventory	$            2,340	$             2,520
Total Inventory required		$          14,220
Less: Beginning inventory		$             2,340
Purchases		$          11,880