Part 1 (12 marks)

Mattress World is a retailing business that sells mattresses. The expected sales volume (i.e. units of product to be sold) for the first four months in 2020 are as follows:

Month Sales (unit)

January 100

February 140

March 130

April 120

The following additional information is available:

Budgeted purchase price for mattresses is $100.

30 units were in the inventory at the end of December 2019.

Mattress world maintain an ending inventory balance of 30% of the next months expected sales.