please explain

Problem 7 Time Plaza, a merchandiser of watches, budgeted purchases of $25,000 for the next quarter. It wishes to maintain an ending inventory level of 20% of purchases. If the beginning merchandise inventory balance amounts to $7,500, calculate the budgeted cost of goods sold for the next quarter. a) $22,500 b) $25,000 c) $27,500 d) $32,500