Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $254,000 for November, $294,000 for December, and $221,000 for January.Collections are expected to be 60% in the month of sale and 40% in the month following the sale.The cost of goods sold is 80% 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 $15,600.Monthly depreciation is $26,500.Ignore taxes. Balance SheetOctober 31Assets Cash$32,000Accounts receivable 82,500Merchandise inventory 182,880Property, plant and equipment, net of $624,000 accumulated depreciation 916,000Total assets$1,213,380 Liabilities and Stockholders' Equity Accounts payable$250,000Common stock 751,000Retained earnings 212,380Total liabilities and stockholders' equity$1,213,380 The cost of December merchandise purchases would be: Multiple Choice $182,640 $203,200 $159,120 $235,200

The cost of goods sold indicates the direct costs incurred in the production of the goods that are…

Answered: Dilly Farm Supply is located in a small…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 15E: Palmgren Company produces consumer products. The sales budget for four months of the year is...

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Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

Sales are budgeted at $254,000 for November, $294,000 for December, and $221,000 for January.
Collections are expected to be 60% in the month of sale and 40% in the month following the sale.
The cost of goods sold is 80% 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 $15,600.
Monthly depreciation is $26,500.
Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	32,000
Accounts receivable		82,500
Merchandise inventory		182,880
Property, plant and equipment, net of $624,000 accumulated depreciation		916,000
Total assets	$	1,213,380

Liabilities and Stockholders' Equity
Accounts payable	$	250,000
Common stock		751,000
Retained earnings		212,380
Total liabilities and stockholders' equity	$	1,213,380

The cost of December merchandise purchases would be:

Multiple Choice

$182,640
$203,200
$159,120
$235,200

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