Chapter 9, Problem 9.63AP

Cost of goods sold, inventory, and purchases budget (Learning Objective 4)

College Logos buys logo-imprinted merchandise and then sells it to university bookstores. Sales are expected to be $2,003,000 in September, $2,230,000 in October, $2,376,000 in November, and $2,520,000 in December. College Logos sets its prices to earn an average 30% gross profit on sales revenue. The company does not want inventory to fall below $435,000 plus 15% of the next month’s cost of goods sold.

Requirement

Prepare a cost of goods sold, inventory, and purchases budget for the months of October and November.