Question 7: MJ Department Store expects to generate the following sales figures for the next three months:
July August September
Expected sales $482,000 $564,000 $595,000
MJ's gross profit rate is 42% of sales dollars. At the end of each month, MJ wants a merchandise inventory balance equal to 30% of the following month's expected sales, stated at cost. What dollar amount of merchandise inventory should MJ plan to purchase in August?
The cost of goods sold for August = 564,000X(1-0.42) = 327,120
The ending inventory for ...
The solution explains how to calculate the dollar amount of inventory to be purchased.