Brarin Corporation is a small wholesaler of gourmet food products. Data regardin

Question

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store?s operations follow: . Sales are budgeted at $430,000 for November, $450,000 for December, and $450,000 for January. . Collections are expected to be 85% In the month of sale, 14% In the month following the sale, and 1% uncollectible. . The cost of goods sold is 85% of sales. . The company would like to maintain ending merchandise inventories equal to 75% of the next month? cost of goods sold. Payment for merchandise is made In the month following the purchase. . Other monthly expenses to be paid in cash are $22,700. . Monthly depreciation is $19,900. . ignore taxes.

Explanation / Answer

November December January Sales $4,30,000 $4,50,000 $4,50,000 Cost of goods sold - 85% of Sales $3,65,500 $3,82,500 $3,82,500 Add: Desired Ending Inventory $2,86,875 $2,86,875 Total Mechandise Inventory required $6,52,375 $6,69,375 Less: Beginning Inventory $2,74,125 $2,86,875 Purchase of Inventory $3,82,500 Hence the correct option is $3,82,500

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