ABC company has budgeted the following sales:

Jan: $100,000

Feb: $200,000

March: $250,000

COGS is 60% of sales and the unit cost is $6.

The selling price is $10 per unit

In addition to having enough units to meet monthly sales, ABC would like ending inventory to be equal to 10% of the following months sales.

Inventory at Dec 31 $6,000 at a cost of $6 per unit

1. How much inventory in units should ABC buy in January?

a. 10,000 units

b. 12,000 units

c. 11,000 units

2. How much inventory in dollars should ABC buy in Jan?

a. $100,000

b. 130,000

c. 78,000