Chu Company Provided the Following Information Related to Its Inventory

question 55

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: $\begin{array}{|l|l|r|r|r|}\hline& \text { Dec. Year } 1 &\text { Jan. Year } 2 &\text { Feb. Year } 2 & \text { Mar. Year } 2 \\\hline & \text { (Actual) } & \text { (Budgeted) }& \text { (Budgeted) }& \text { (Budgeted) } \\\hline \text {Cost of goods sold } &\$ 80,000 & \$ 140,000 & \$ 180,000 & \$ 120,000 \\\hline\end{array}$ 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.

---

Definitions:

Default Rules

Default rules are legally established standards that apply when parties to a contract do not stipulate their own arrangements or when such arrangements are not legally enforceable.

LLC

Stands for Limited Liability Company, a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Limited Partnership

A business arrangement where one or more partners are liable only to the extent of their investment, while at least one partner has unlimited liability.

Certificate of Limited Partnership

A legal document filed with a state government to establish the existence of a limited partnership.