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Budgeted sales for the first quarter for Cullison Company, a retailer, are as follows:   Budgeted Sales (units) January150,000 February200,000 March220,000 Cullison started the year with an inventory of 15,000 units.  The company likes to maintain an inventory equal to 10% of next month’s budgeted sales. Budgeted purchases in units for February would be:Question 10Select one:a.200,000b.202,000c.220,000d.222,000

Question

Budgeted sales for the first quarter for Cullison Company, a retailer, are as follows:   Budgeted Sales (units) January150,000 February200,000 March220,000 Cullison started the year with an inventory of 15,000 units.  The company likes to maintain an inventory equal to 10% of next month’s budgeted sales. Budgeted purchases in units for February would be:Question 10Select one:a.200,000b.202,000c.220,000d.222,000

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Solution

To calculate the budgeted purchases in units for February, we need to consider the inventory at the start of the month, the expected sales for the month, and the desired inventory at the end of the month.

  1. Start with the inventory at the start of February. This is the desired inventory at the end of January, which is 10% of February's budgeted sales. 10% of 200,000 units is 20,000 units.

  2. Add the budgeted sales for February, which is 200,000 units. This gives us a total of 220,000 units.

  3. Subtract the desired inventory at the end of February, which is 10% of March's budgeted sales. 10% of 220,000 units is 22,000 units.

So, the budgeted purchases in units for February would be 220,000 units - 22,000 units = 198,000 units.

However, this option is not given in the choices. There might be a mistake in the question or the provided choices.

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