May Corporation, a merchandising firm, has budgeted sales as follows for the thi

Question

May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of the year: July $84,400 August $95,400 September $80,600 Cost of goods sold is equal to 80% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $85,176. The company is now preparing a Merchandise Purchases Budget. The desired beginning inventory for September is: $166,348

Explanation / Answer

Calculate desired beginning inventoy for september :

Beginning inventory for september :

September sales = 80600

September cost of goods sold = (80600*80) = 64480

Beginning Inventory for september = (64480*130%) = $83824

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