Use the Information Below to Answer the Following Question(s)

question 55

Multiple Choice

Use the information below to answer the following question(s) .
Peabody Enterprises prepared the following sales budget:

The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-A tire store purchased $3,800 of tires in September. The store had $1,500 of tires on hand at the beginning of September, and expected to have $1,300 of tires at the end of September to cover part of anticipated October sales. What is the budgeted cost of goods sold for September?

• A) $4,000
• B) $3,600
• C) $6,600
• D) $5,300

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Definitions:

Unfavorable

A term used in budgeting and variance analysis indicating costs exceeded the budget or revenue fell short.

Variable Overhead Efficiency Variance

The difference between the expected variable overhead costs based on standard costing and the actual variable overhead incurred, attributable to efficiency.

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost expected to be paid, reflecting changes in price.

Raw Materials Price Variance

A measure of the difference between the actual cost of raw materials and the expected (standard) cost.