Answer:
Particulars Jan Feb Mar
Purchase $160,000 $200,000 $252,000
Explanation:
For computing the required purchase from Jan to Mar we need to find out the following amounts
Particulars Jan Feb Mar Apr
Projected sales $380,000 $460,000 $620,000 $660,000
COGS at 40% $152,000 $184,000 $248,000 $264,000
Ending inventory $46,000 $62,000 $66,000
Beg inventory $38,000 $46,000 $62,000
Now the required purchased for each month is
Particulars Jan Feb Mar
COGS $152,000 $184,000 $248,000
Add: ending inve $46,000 $62,000 $66,000
Less: Beg inve ($38,000) ($46,000) ($62,000)
Purchase $160,000 $200,000 $252,000
Here,
COGS = Cost of goods sold
Since the desired ending inventory is 25 percent of the following month’s cost of goods sold so beginning inventory would be 25 percent in current year cost of goods sold
