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Sveta_85 [38]
3 years ago
13

Wallace Company provides the following data for next year: MonthBudgeted Sales January$ 120,000 February 108,000 March 132,000 A

pril 144,000 The gross profit rate is 35 % of sales. Inventory at the end of December is $ 21,600 and target ending inventory level are 20 % of next month's sales, stated at cost. What is the amount of purchases budget for January
Business
1 answer:
Ad libitum [116K]3 years ago
7 0

Answer:

$70440

Explanation:

Given data :

Month             Budgeted sales

January           $120,000

February         $108,000

March              $132,000

April                 $144,000

Gross profit rate = 35% of sales

Inventory at end of December = $21600

Target ending inventory level = 20% of next month sales

<u>Determine the amount of purchases budget for January</u>

First step : calculate

Cost of goods for January = Budgeted sales - Gross profit

= $120,000 - $42,000 =  $78000

Next : determine ending inventory in January

= 20% * ( Budgeted sales in Feb * 65% )

= 20% * ($108000 * 65%) = $14040

Determine budgeted purchase using the Relation below

Cost of goods sold = Beginning inventory + Budgeted purchases - Ending inventory

78,000 = 21600 + Budgeted purchases - 14040

therefore

Budgeted purchases for January = ( 78,000 + 14040 - 21600 )

                                                       = $70440

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Budgeted Income Statement and Balance Sheet
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Answer:

Regina Soap Co.

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less Cost of Sales = $482,000

Gross Profit = $518,000

less Selling Expenses = $256,000

less Administrative expenses = $135,400

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Finished Goods 69,300

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Total = $618,500

Explanation:

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Direct labor  = $130,000 ($0.65  x 200,000 units sold)

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Other factory overhead $92,000 (12,000 + 0.40 x 200,000)

Total = $482,000

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Miscellaneous selling expense $56,000 (6,000 + 0.25 x 200,000)

Total = $256,000

c) Administrative Expenses Budget:

Office and officers salaries $96,400 (72,400+ 0.12  x 200,000)

Supplies 25,000 (5,000 + 0.10  x 200,000)

Miscellaneous administrative expense $14,000( 4,000 + 0.05 x 200,000)

Total = $135,400

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Sales Value = $1,000,000

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Cost of sales ($482,000)

Selling Expenses  ($256,000)

Administrative Expenses  ($135,400)

Purchase of Equipment ($75,000)

Payment of Taxes ($30,000)

Payment of Quarterly Dividends ($10,800)

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Answer:

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