Techno Company sells mobile phones worldwide. The company expects to sell 4100 comma 100 mobile phones for $ 185 each in January and 3 comma 800 mobile phones for $ 220 each in February. All sales are cash only. Techno expects cost of goods sold to average 50 % of sales revenue. The company expects to sell 4 comma 600 mobile phones in March for $ 280 each. Techno's target ending inventory is $ 9 comma 000 plus 50% of the next month's cost of goods sold. 1. Prepare the sales budget for January and February. 2. Prepare the company's cost of goods sold, inventory, and purchases budget for January and February.

See the explanation below.

Explanation:

Note: The 4,100 correct units for January is used instead of the mistakenly written one in the question.

1. Prepare the sales budget for January and February.

January sales revenue budget =  4,100 * $220 = $902,000

February sales revenue budget = 3.800 * $220 = $836,000

2. Prepare the company's cost of goods sold

Cost of good sold

January cost of good sold budget = $902,000 * 50% = $451,000

February cost of good sold budget = $836,000 * 50% = $418,000

Inventory

March sales revenue budget = 4.600 * $280 = $1,288,000

March cost of good sold budget = $1,288,000 * 50% = $644,000

January ending inventory = $9,000 + (50% * $418,000) = $218,000

February ending inventory = $9,000 + (50% * $644,000) = $331,000

Purchase

Beginning inventory + Purchases - ending inventory = cost of good sold

Purchases = Cost of good - Beginning inventory + Ending inventory

January purchases budget = $451,000 - 0 + $218,000 = $699,000

February purchases budget = $418,000 - $218,000 + $331,000 = $531,000

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