DeVon Companys cost of goods sold is consistently $30 per unit. The company plans to carry ending

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DeVon Company’s cost of goods sold is consistently $30 per unit. The company plans to carry ending merchandise inventory for each month equal to 20% of the next month’s budgeted unit sales; August beginning inventory is 2,000 units. All merchandise is purchased on credit, and 40% of the purchases made during a month is paid for in that month. Another 25% is paid for during the first month after purchase, and the remaining 35% is paid for during the second month after purchase. Expected unit sales are: August (actual), 10,000; September (actual), 9,500; October (estimated), 8,750; November (estimated), 8,250. Use this information to determine October’s expected cash payments for purchases.

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Managerial Accounting

ISBN: 978-0073379586

2010 Edition

Authors: John J. Wild, Ken W. Shaw

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