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Clare Purchases a Single Product for $15 and Sells It

question 70

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Clare purchases a single product for $15 and sells it for $30.Forecasted sales for the next three months are July 4,000 units,August 6,000 units,September 7,500 units.Clare's policy is to have an ending inventory of 40% of the next month's sales needs on hand.July 1 inventory is projected to be 1,500 units.What are budgeted purchases in units for August?


Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold, excluding fixed manufacturing overhead.

Contribution Margin

The gap between sales income and variable expenses, showing the extent to which income aids in offsetting fixed expenses and creating earnings.

Cost-Volume-Profit

An analysis tool used to determine how changes in costs and volume affect a company's operating income and net income.

Sales Volume

The total quantity of products or services sold by a company during a specific period of time.

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