Wallace Company provides the following data for next year: Month Budgeted Sales January $120,000 February 108,000 March 140,000 April 147,000 The gross profit rate is 35% of sales. Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for January

Question

Business

Evelyn Yoder

2 December, 08:43

Wallace Company provides the following data for next year: Month Budgeted Sales January $120,000 February 108,000 March 140,000 April 147,000 The gross profit rate is 35% of sales. Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for January

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Donavan Burch · Answer 1

Total purchase = $55,420

Explanation:

Giving the following information:

Wallace Company provides the following data for next year: Month Budgeted Sales January $120,000 February 108,000. Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost.

The gross profit rate is 35% of sales.

Cost of January = 120,000*0.65 = 78,000

Purchase for Febraury = [ (108000*0.65) * 0.10] = 7,020

Beginning inventory = 29,600 (-)

Total purchase = $55,420