Teleco Corp April's Cost of Goods Sold Is $32,000

Teleco Corp.is preparing its budget for the first quarter of 2018.The following data is provided: $$\begin{array} { | l | r | r | r | } \hline { \text { Inventory, Purchases, and COGS Budget } } &{ \text { Jan } } & { \text { Feb } } & { \text { March } } \\\hline \text { Cost of goods sold (a) } & \$ 34,000 & \$ 27,000 & \$ 22,500 \\\hline \text { Desired ending inventory (b) } & \underline { 11,750 } & \underline { 10,625 } & ? \\\hline \text { Total inventory required } & 45,750 & 37,625 & \\\hline \text { Less: Beginning inventory } & \underline { ( 20,000 } & \underline { ( 11,750 } & \\\hline \text { Budgeted Purchases } & \$ \underline { 25,750 } & \$ \underline { 25,875 } & \\\hline \text { (a) COGS } = 75 \% \text { of sales } & & & \\\hline \text { (b) } \$ 5000 + 25 \% \text { of COGS for next month } & & & \\\hline\end{array}$$ April's cost of goods sold is $32,000.The amount of Merchandise Inventory to be shown on the budgeted balance sheet at March 31 would be ________.

A) $10,625
B) $11,750
C) $34,000
D) $13,000

Correct Answer:

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