The Willsey Merchandise Company has budgeted $56,000 in sales for the month of D

Question

The Willsey Merchandise Company has budgeted $56,000 in sales for the month of December. The company's cost of goods sold is 35% of sales. If the company has budgeted to purchase $26,800 in merchandise during December, then the budgeted change in inventory levels over the month of December is

The Willsey Merchandise Company has budgeted $56,000 in sales for the month of December. The company's cost of goods sold is 35% of sales. If the company has budgeted to purchase $26,800 in merchandise during December, then the budgeted change in inventory levels over the month of December is

Explanation / Answer

Hi,

Please find the answer as follows:

Budgeted Purchases = 26800

Less Cost of Goods Sold = 56000*.35 = 19600

Increase in Merchandise Inventory = 7200

Answer is 7200 increase.

Thanks.

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