Bramble Corporation Is a Small Wholesaler of Gourmet Food Products

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
o Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for January.
o Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
o The cost of goods sold is 75% of sales.
o The company would like to maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
o Other monthly expenses to be paid in cash are $24,000.
o Monthly depreciation is $15,000.
o Ignore taxes.

-The cost of December merchandise purchases would be:

A) $255,000
B) $139,500
C) $235,500
D) $240,000

Correct Answer:

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