O'Hare Company Is in the Process of Preparing a Purchases

question 11

Multiple Choice

O'Hare Company is in the process of preparing a purchases budget for the first quarter of Year 2.The company has budgeted sales as follows: $\begin{array}{|l|ll|}\hline \text { Dec. Year 1 } & \text { \$ } & 44,000 \\\hline \text { Jan. Year 2 } & \$ & 46,500 \\\hline \text { Feb. Year 2 } & \$ & 51,000 \\\hline \text { Mar. Year 2 } & \$ & 61,500 \\\hline\end{array}$ Cost of goods sold is expected to be 75% of sales.The company would like to have ending inventory each month equal to 25% of the following month's predicted cost of sales.The total cost of purchases in January Year 2 is:

• A) $35,719.
• B) $46,500.
• C) $44,438.
• D) $59,250.

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Definitions:

Kodak Disc

A film format introduced by Kodak in the 1980s for still photography, using a disc-shaped film cassette, now mostly obsolete.

Marginal Utility

The incremental pleasure or usefulness attained by consuming an extra unit of a good or service.

Total Utility

The overall satisfaction or pleasure a person derives from consuming a certain amount or quantity of goods or services.

Limited Income

Income that is not sufficient to meet the minimum standard of living or personal financial needs.