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Wallace Company provides the following data for next year: Budgeted Sales $126,000 Month January February 111,000 March 134,000 April 147,000 The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for February? O A. $36,180 B. $79,310 OC. $77,700 O D. $97,580

Wallace Company provides the following data for next year: Budgeted Sales $126,000 Month January February 111,000 March 134,000 April 147,000 The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for February? O A. $36,180 B. $79,310 OC. $77,700 O D. $97,580

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Wallace Company provides the following data for next year: Budgeted Sales $126,000 Month January February 111,000 March 134,000 April 147,000 The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for February? O A. $36,180 O B. $79,310 C. $77,700 O D. $97,580
Transcribed Image Text:Wallace Company provides the following data for next year: Budgeted Sales $126,000 Month January February 111,000 March 134,000 April 147,000 The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for February? O A. $36,180 O B. $79,310 C. $77,700 O D. $97,580
Expert Solution
Step 1

Cost of goods sold of a business says that how much cost has been incurred for selling goods after deducting gross profit margin.

Cost of goods sold = Sales - Gross Profit Margin

Cost of goods sold = Beginning Inventory + Budgeted Purchases - Closing inventory

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