Question

The McShera buys mixing machines for $90 each and sells them for $220 each. The company projected the following sales in units March 5,500 April 6,000 May 5,200 June 5,000 Inventory on March 1st was 800 units and the company wants to maintain ending inventory at 15% of the next month's projected sales volume. What total dollar amount of ending inventory would be budgeted for April?

Answer 1

The total dollar amount of ending inventory would be budgeted for April is $702,00

Step-by-step explanation:

The computation of the total dollar amount of ending inventory is shown below:

= May sales in units × given percentage × buying price

= 5,200 units × 15% × $90

= $70,200

Since, in the question, it is given that the ending inventory units shall be computed by considering the 15% of next month sales. So, we do the same thing. We ignore selling price.