Question

In: Accounting

Based on the following, what is this company's desired BEGINNING inventory for June 1. You must...

Based on the following, what is this company's desired BEGINNING inventory for June 1. You must show work for credit.

Month Budgeted Sales

April $400,000

May $420,000

June $450,000

Cost of Goods Sold as a percentage of current 55%

month's sales

Desired Ending Inventory as a percentage of 15%

NEXT month's Cost of Goods Sold

Expert Solution

Solution:

$37,125

Explanation:

closing inventory of may is the beginning inventory of June

May sales = $420,000

May cost of goods sold = 420,000 x 55% = $231,000

June sales = $450,000

June cost of goods sold = $450,000 x 55% = $247,500

Ending inventory of May = 15% of next month cost of goods sold=15% of june cost of goods sold=($247,500) x15%

Ending inventory of may = $37,125 Which is beginning inventory of June

ekkarill92 answered 2 years ago

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