At the end of January, budgeted ending inventory is

ACCOUNTING

Multiple Choice

The following information pertains to the January operating budget for Casey Corporation

· Budgeted sales for January $100,000 and February $200,000.

· Collections for sales are 60% in the month of sale and 40% the next month

· Gross margin is 30% of sales

· Administrative costs are $10,000 each month

· Beginning accounts receivable $20,000

· Beginning inventory $14,000

· Beginning accounts payable $60,000. (All from inventory purchases.)

· Purchases are paid in full the following month

· Desired ending inventory is 20% of next month’s cost of goods sold (COGS)


At the end of January, budgeted ending inventory is

a. $20,000

b. $28,000

c. $40,000

d. none of the above

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