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?
Additional Information:
This question belongs to Finance and it explain about calculation of inventory and purchases for the months of March and April in a business.