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28 July, 12:51

Cool Logos buys logo-imprinted merchandise and then sells it to university bookstores. Sales are expected to be $ 2 comma 003 comma 000 in September, $ 2 comma 240 comma 000 in October, $ 2 comma 378 comma 000 in November, and $ 2 comma 520 comma 000 in December. Cool Logos sets its prices to earn an average 30 % gross profit on sales revenue. The company does not want inventory to fall below $ 420 comma 000 plus 20 % of the next month's cost of goods sold. Prepare a cost of goods sold, inventory, and purchases budget for the months of October and November. Cool Logos Cost of Goods Sold, Inventory, and Purchases Budget For the Months of October and November October November Cost of goods sold Plus: Desired ending inventory Total inventory required Less: Beginning inventory Purchases

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  1. 28 July, 16:21
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    Cost of Goods Sold Budget

    October November

    Cost of Goods Sold $1,568,000 $1,664,600

    Inventory Budget

    October November

    Total $752,920 $772,800

    Purchase Budget

    October November

    Budgeted Purchases $2,259,320 $2,397,880

    Explanation:

    Cost of Goods Sold Budget

    Gross Profit Margin = 30% therefore Markup is 70%

    October November December

    Sales $2,240,000 $2,378,000 $2,520,000

    Cost of Goods Sold (70%) $1,568,000 $1,664,600 $1,764, 000

    Inventory Budget

    October November

    Base Amount $420,000 $420,000

    Based on Sales (20%) $332,920 $352,800

    Total $752,920 $772,800

    Purchase Budget

    October November

    Budgeted Sales $2,240,000 $2,378,000

    Add Budgeted Closing Inventory $752,920 $772,800

    Total Purchases Needed $2,992,920 $3,150,800

    Less Budgeted Opening Inventory ($733,600) ($752,920)

    Budgeted Purchases $2,259,320 $2,397,880

    September Closing Stock is October's Opening Stock

    Therefore September Closing Stock = $420,000 + $1,568,000 * 20%

    = $733,600
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