Leaverton's Forecast of Sales Is as Follows: July,$60,000; August,$90,000; September,$130,000

question 91

Multiple Choice

Leaverton's forecast of sales is as follows: July,$60,000; August,$90,000; September,$130,000.Sales are normally 80 percent cash and 20 percent credit in any month.Credit sales are collected in full in the following month.Merchandise cost averages 60 percent of sales price.The company desires an inventory as of September 30 of $52,000.The inventory as of June 30 was $25,000. Total purchases that must be made in order to meet sales and inventory requirements for the quarter amount to

• A) $195,000.
• B) $253,000.
• C) $141,000.
• D) $307,000.

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Definitions:

Nonrenewable Resource

A natural resource that cannot be replenished at a rate to match its consumption, such as fossil fuels or minerals.

User Cost

The cost associated with the use of a product or service, including wear and tear, depreciation, and the opportunity cost of not using the asset for an alternative purpose.

Extraction Cost

The expenses associated with the removal of raw materials from their natural setting, including mining, drilling, and quarrying activities.

Interest Rates

The cost of borrowing money or the return on investment for savings, typically expressed as a percentage of the principal.