Olson Company has a sales budget for next month of $50,000.Cost of goods sold is expected to be 60 percent of sales.All goods are purchased in the month used and paid for in the month following their purchase.The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired.Beginning accounts payable is $13,000.
-The cost of goods sold for next month is expected to be
A) $29,500.
B) $30,500.
C) $50,000.
D) $30,000.

Question

Olson Company has a sales budget for next month of $50,000.Cost of goods sold is expected to be 60 percent of sales.All goods are purchased in the month used and paid for in the month following their purchase.The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired.Beginning accounts payable is $13,000. 
-The cost of goods sold for next month is expected to be
A) $29,500.
B) $30,500.
C) $50,000.
D) $30,000.

Quizplus · Accepted Answer

The cost of goods sold is 60% of sales, so $50,000 * 0.60 = $30,000.

Olson Company Has a Sales Budget for Next Month of $50,000.Cost