Can someone explain to me HOW this answer was determined? Where does this fit into the flexible budget vs. static budget?

XYZ Company prices its products by adding 30% to its cost. XYZ anticipates sales of $715,000 in March, $728,000 in April, and $624,000 in May. XYZ's policy is to have on hand enough inventories at the end of the month to cover 25% of the next month's sales. What will be the cost of the inventory that XYZ should budget for purchases in April? Please explain your work.

Solution:

Cost of Inventory = Sales price/1.3

March Cost of Inventory. $715,000/1.3 $550,000

April Cost of Inventory $728,000/1.3 $560,000

May Cost of Inventory $624,000/1.3 $480,000

Ending Inventory = Beginning Inventory + Purchases - Cost of Goods Sold (COGS)

April Ending Inventory $480,000 x 25% $120,000

Beginning Inventory $560,000 x 25%. $140,000

$120,000 = $140,000 + Purchases - Cost of Goods Sold (COGS)

Ending Inventory = Beginning Inventory + Purchases - Cost of Goods Sold (COGS)

$120,000 = $140,000 + Purchases - Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS) for April=$560,000

$120,000 = $140,000 + Purchases - $560,000

Purchases = $120,000 - $140,000 + $560,000

Purchases = $540,000

The cost of the inventory that ABC should budget for purchases in April is $540,000.