Question

Montel Company’s July sales budget calls for sales of $550,000. The store expects to begin July with $57,000 of inventory and to end the month with $40,000 of inventory. Gross margin is typically 40% of sales. Determine the budgeted cost of merchandise purchases for July.

Answer 1

Answer:

the budgeted cost of merchandise purchases for July is $313,000

Explanation:

given data

July sales = $550,000

begin July inventory = $57,000

end the month inventory = $40,000

Gross margin = 40% of sales

to find out

budgeted cost of merchandise purchases for July

solution

we will get here cost of sales that is express as

Cost of sales = $550,000 × (1 - 0.40)

Cost of sales = $330,000

and

The budgeted cost of merchandise purchases for July will be

budgeted cost = Closing Stock of Inventory + cost of sales - Opening Stock of inventory     ............................1

put here value

budgeted cost =  $40,000 + $330,000  - $57,000

budgeted cost = $313,000

so the budgeted cost of merchandise purchases for July is $313,000