Reference no: EM132617742
Tremont, Inc. sells tire rims. Its sales budget for the nine months ended September 30, 2018, and additional information follow:
Problem 1: Prepare an inventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine-month period.
Data Table
Quarter Ended Nine-Month
March 31 June 30 September 30 Total
Cash sales, 40% $50,000 $70,000 $60,000 $180,000
Credit sales, 60% 75,000 105,000 90,000 270,000
Total sales
MARCH $125,000
JUNE $175,0000
SEPTEMBER $150,000
TOTAL $450,000
In the past, cost of goods sold has been 40% of total sales. The director of marketing and the financial vice president agree that each quarter's ending inventory should not be below $10,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $225,000 during the fourth quarter. The January 1 inventory was $37,000.