Use the COGS model to make management decisions
Response to the following problem:
Teaching Toys prepares budgets to help manage the company. Teaching Toys is budgeting for the fiscal year ended January 31, 2014. During the preceding year ended January 31, 2013, sales totaled $9,600 million and cost of goods sold was $6,600 million. At January 31, 2013, inventory was $1,600 million. During the upcoming 2014 year, suppose Teaching Toys expects cost of goods sold to increase by 12%. The company budgets next year's inventory at $1,900 million.