11

Refer to Exhibit 9-1. What dollar amount of merchandise inventory will be purchased in April?

		$1,848,000
		$552,000
		$1,272,000
		$1,128,000
		None of the answer choices is correct.

Exhibit 9-1 Sporting Inc. is a distributor which sells one product for $100 per unit. Sporting pays $60 to buy the product. In addition, fixed costs total $60.000 per month. Sporting wishes to maintain an inventory at the end of each month equal to 30% of the next month's projected sales. Purchases are paid in the month after purchase. Sporting makes all sales on credit and collects 40% in the month of sale and 60% in the month after sale. Budgeted monthly sales in units for the first five months of 2013 are as follows: January February March April May 10.000 units 15,000 units 18,000 units 20,000 units 16,000 units