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XYZ Company prices its products by adding 30% to its costs. XYZ anticipates sales of...

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Accounting

XYZ Company prices its products by adding 30% to its costs. XYZ anticipates sales of $715,000 in March. $728,000 in April, and $624,000 in may. XYZ's policy is to have on hand enough inventories at the end of the month to cover 25% of the months sales. What will be the cost of the inventory that ABC should budget for purchases in April? please explain your work be sure to use APA format.

solution:

cost of inventory= sales price 11.3

march cost of inventory $715,000/1.3 $550,000

April cost of inventory $728,000/1.3 $60,000

May cost of inventory $624,000/1.3 $480,000.

Ending inventory= beginning inventory +purchases-cost of goods sold (cogs)

April ending inventory $480,000 x 25% $140,000

$120,000=$140,000+ purchases-cost of goods (cogs)

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