Chu Company Provided the Following Information Related to Its Inventory

question 6

Multiple Choice

Chu Company provided the following information related to its inventory sales and purchases for December Year 1 and the first quarter of Year 2: $\begin{array}{llcc}&\text { Dec. Year } 1 &\text { Jan. Year } 2 &\text { Feb. Year } 2 &\text { Mar. Year }\\&\text { (Actual) }&\text {(Budgeted) }&\text {(Budgeted) }&\text {(Budgeted) }\\\text { Cost of goods}& \$80,000 &\$140,000 &\$180,000 &\$ 120,000 \\\text { sold }\end{array}$
Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February Year 2 would be:

• A) $135,000.
• B) $165,000.
• C) $180,000.
• D) $225,000.

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