Tuscarora, Inc., a merchandising company, has the following budgeted figures: Jan Feb Mar April Sales $57,300 $60,000 $83,000 $98,000 Cost of goods sold 50% of sales Required ending inventory $10,000 + 30% of next month's sales Inventory on hand on Jan 1 $30,000 Calculate the budgeted purchases for the month of January. A. $56,650 B. $650 C. $28,000 D. $26,650

$26,650

Explanation:

TO CALCULATE BUDGETED PURCHASE FOR JANUARY, REQUIRED PARAMETERS ARE;

BUDGETED PURCHASE

January = $57,300

February =$60,000

COST OF GOODS SOLD = BEGINNING INVENTORY + PURCHASE BUDGET - ENDING INVENTORY

Cost of goods sold = 50% of required sales

Ending inventory = 30% of next month's sales + $10,000

Beginning inventory = $30,000(inventory on hand on January 1) (inventory carried over from the previous month)

Therefore,

COST OF GOODS SOLD = 0.5 × $57,300 = $28,650

ENDING INVENTORY = (0.3 × $60,000) + $10,000= $28,000

BEGINNING INVENTORY = $30,000

COST OF GOODS SOLD = BEGINNING INVENTORY + PURCHASE BUDGET - ENDING INVENTORY

$28,650 = $30,000 + BUDGETED PURCHASE - $28,000

$28,650+$28,000-$30,000 = BUDGETED PURCHASE

THEREFORE, BUDGETED PURCHASE FOR THE MONTH OF JANUARY = $26,650

there was no passage listed but using the process of elimination i'd say it was d. the high economy would do the opposite. i don't see how low prices would affect it. high unemployment is possible but i feel d is the better answer.