Dilly Farm Supply Is Located in a Small Town in the Rural

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:Sales are budgeted at $281,000 for November, $321,000 for December, and $212,000 for January.Collections are expected to be 75% in the month of sale and 25% in the month following the sale.The cost of goods sold is 75% of sales.The company desires to have an ending merchandise inventory at the end of each month equal to 90% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.Other monthly expenses to be paid in cash are $20,100.Monthly depreciation is $22,000.Ignore taxes. The cost of December merchandise purchases would be:

A) $240,750
B) $210,750
C) $143,100
D) $167,175

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free