Contigo Company provided the following information related to its inventory sales. Actual – December: 80,000 Budgeted-January:...

Contigo Company provided the following information related to its inventory sales.

Actual – December: 80,000

Budgeted-January: 140,000

Budgeted-February: 180,000

Budgeted-March: 120,000

Contigo desired ending inventory levels are 20% of the following months projected COGS. Budgeted purchases of inventory in February 2017 would have been:

Expert Solution

All working forms part of the answer
Budgeted purchases of inventory in February = Budgeted sales + Desired ending inventory (20% x 120000 sales of march) – Beginning Inventory (equal to Ending inventory on January)
Working, complete for all months:

Working		December	January	February	March
A	Sales Units	80,000	140,000	180,000	120,000
B = 20% of next month's 'A'	Desired ending Inventory	28,000	36,000	24,000	-
C = A+B	Total needs	108,000	176,000	204,000	120,000
D = Last month's 'B'	Beginning Inventory	-	28,000	36,000	24,000
E = C - D	Budgeted Purchases	108,000	148,000	168,000 = ANSWER	96,000

Hence, The Budgeted purchases of Inventory in February = 168,000

ekkarill92 answered 1 year ago

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