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Coronet Company and Presidente Company

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13. Coronet Company provided the following information related to its inventory sales and purchases for December 2007 and the first quarter of 2008:

Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2008 would be
A) $ 67,500
B) $ 90,000
C) $ 82,500
D) $112,500

14. Presidente Company provided the following information relevant to its inventory sales and purchases for December 2007 and the first quarter of 2008:

Desired ending inventory levels are 25% of the following month's projected cost of goods sold. The company purchases all inventory on account. January 2008 budgeted purchases are $75,000. The normal schedule for inventory payments is 60% payment in month of purchase and 40% payment in month following purchase
Budgeted cash payments for inventory in February 2008 would be
A) $66,300
B) $79,500
C) $49,500
D) $76,300

15. Sales for January are budgeted at 50,000 units, and the company expects sales to increase 7% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?
A) 53,500 units
B) 58,500 units
C) 63,500 units
D) none of the above

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13. Coronet Company provided the following information related to its inventory sales and purchases for December 2007 and the first quarter of 2008:

Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2008 would be
A) $ 67,500
B) $ 90,000
C) $ 82,500
D) $112,500

Answer: C

Beginning balance + Budgeted purchases of inventory - Budgeted Cost of goods sold = Desired ending ...

Solution Summary

This solution is comprised of a detailed explanation to calculate budgeted purchases of inventory, budgeted cash payments for inventory, and how many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units.

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