Arete Company expects to sell 7,500 units for $ 165 each for a total of $ 1,237

Question

Arete Company expects to sell 7,500 units for $ 165 each for a total of $ 1,237 comma 500 in January and 2,500 units for $ 185 each for a total of $ 462,500 in February. The company expects cost of goods sold to average 70 % of sales revenue, and the company expects to sell 4,200 units in March for $ 300 each. Arete 's target ending inventory is $ 10,000 plus 40 % of the next month's cost of goods sold. Prepare Arete 's inventory, purchases, and cost of goods sold budget for January and February.

Arete Company Inventory, Purchases, and Cost of Goods Sold Budget Two months Ended January 31 and February 28 January February Cost of goods sold Plus: Desired ending merchandise inventory Total merchandise inventory required Less: Beginning merchandise inventory Budgeted purchases

Explanation / Answer

ARETE COMPANY

INVENTORY,PURCHAE AND COST OF GOODS SOLD BUDGET

TWO MONTHS ENDED JANUARY AND FEBRUARY 2018

JANUARY

FEBRUARY

COST OF GOOD SOLD

$866250

$323750

PLUS:-DESIRED ENDING MECHANDISE INVENTORY

$139500

$139500

TOTAL MECHANDISE INVENTORY REQUIRED

$1005750

$463250

PLUS:-BEGINNING MECHANDISE INVENTORY2

$356500

$362800

BUDGETED PURCHASE

$649250

$100450

WORKINGS

CALCULATION OF COST OF GOODS SOLD

SELLS UNIT

RATE

AMOUNT

COST OF GOODS SOLD (70% OF SALES REVENUE

7500

165

$1237500

$866250

2500

185

$462500

$323750

4200

300

$1260000

$882000

INVENTORY FOR THE MONHT OF JANUARY

VALUE

OPENING= 10,000+40% OF $866250

$356500

CLOSING=10,000+40% OF $323750

$139500

INVENTORY FOR THE MONHT OF FEBRUARY

OPENING= 10,000+40% OF $323750

$139500

CLOSING=10,000+40% OF $882000

$362800

ARETE COMPANY

INVENTORY,PURCHAE AND COST OF GOODS SOLD BUDGET

TWO MONTHS ENDED JANUARY AND FEBRUARY 2018

JANUARY

FEBRUARY

COST OF GOOD SOLD

$866250

$323750

PLUS:-DESIRED ENDING MECHANDISE INVENTORY

$139500

$139500

TOTAL MECHANDISE INVENTORY REQUIRED

$1005750

$463250

PLUS:-BEGINNING MECHANDISE INVENTORY2

$356500

$362800

BUDGETED PURCHASE

$649250

$100450

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.