Answer the following questions using the information below:
Beerwah Company provides the following data for next year:
$$\begin{array} { l r }
\text { Month } & \text { Budgeted Sales } \
\text { January } & \$ 160000 \
\text { February } & 144000 \
\text { March } & 176000 \
\text { April } & 192000
\end{array}$$ The gross profit rate is 40% of sales.Inventory at the end of December is $21 600 and target ending inventory levels are 30% of next month's sales,stated at cost.
-Purchases budgeted for January total:
A)$72 000.
B)$74 160.
C)$100 320.
D)$130 800.

Question

Answer the following questions using the information below:
Beerwah Company provides the following data for next year:
 $$\begin{array} { l r } 
\text { Month } & \text { Budgeted Sales } \
\text { January } & \$ 160000 \
\text { February } & 144000 \
\text { March } & 176000 \
\text { April } & 192000
\end{array}$$ The gross profit rate is 40% of sales.Inventory at the end of December is $21 600 and target ending inventory levels are 30% of next month's sales,stated at cost.
-Purchases budgeted for January total:
A)$72 000.
B)$74 160.
C)$100 320.
D)$130 800.

Quizplus · Accepted Answer

To calculate January's purchases:  1. Calculate January's cost of goods sold (COGS): $160,000 * (1 - 0.40) = $96,000.  2. Calculate February's ending inventory at cost: $144,000 * 0.30 * (1 - 0.40) = $25,920.  3. January's purchases = January's COGS + February's ending inventory - December's ending inventory: $96,000 + $25,920 - $21,600 = $100,320.

Answer the Following Questions Using the Information Below: Beerwah Company

Answer the Following Questions Using the Information Below:
Beerwah Company