nmit Company expects to sell 6 000 units for $150 each for a total of $900 000 n

Question

nmit Company expects to sell 6 000 units for $150 each for a total of $900 000 n January and 2.300 units for $220 each for a total of $5 6,00 n February. The company expects cost of goods sold to a era 70% o sales e and the company expects to sell 4,500 units in March for 220 each. Summit s ar et endin n entry s 0,00 plus 40 % o the next month's cost of goods sold. Prepare Summits n enton purchases and cost of goo s so d budget or January and February Summit 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

Summit Company

Inventory, Purchases ad cost of goods sold budget

Particulars January February March (for working only) (a) Sales 900000 506000 990000 (b) Cost of Goods Sold = 70% of (a) 630000 354200 693000 (c) Plus: Desired ending merchandise inentory {10,000+40% of next month (b) } 151680 287200 (d) Total Merchandise inventory required (b)+(c) 781680 641400 (e) Less: Beginning inentory merchandise {10,000+ 40% of (b)} 262000 151680 (f) Budgeted Purchase (d)-(e) 519680 489720

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