Calculate Inventory And Purchases

Question

Sorensen Corporation has provided the following information is provided for the March operating budget:

Budgeted sales for March $100,000 and April $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 (March 1) $20,000

Beginning inventory (March 1) $14,000

Beginning accounts payable (March 1) $60,000 (All from inventory purchases)

Purchases are paid in full the following month.

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

No loans are outstanding on March 1.

For March, what are the budgeted purchases of inventory?

Summary

The question belongs to Finance and it discusses about calculation of inventory and purchases for the months of March and April in a business.

Total Word Count 32