Question

Skymont Company wants an ending inventory each month equal to 30% of that month's cost of goods sold. Cost of goods sold for February is projected at $45,000. Ending inventory at the end of January was $12,000. Based on this information, purchases for February would be:

Answer 1

Purchases for February would be: $46,500

Step-by-step explanation:

Prepare a Purchases Budget to find the Purchases for February.

Purchases Budget for February

Budgeted Cost of Sales $45,000

Add Budgeted Closing Inventory ($45,000 × 30%) $13,500

$58,500

Less Budgeted Opening Inventory ($12,000)

Budgeted Purchases $46,500