Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:
a. $134,000b. $109,000c. $91,500d. $25,000e. $91,000

The correct answer is option (b).

Explanation:

According to the scenario, computation of the given data are as follows:

September.30 inventory = $32,500

Required Dec.31 inventory = $41,500

Let the budgeted purchases for the fourth quarter = P

So, we can calculate the budget purchase by using following formula:

Required Dec.31 inventory = Sep.30 inventory + P - COGS

Where, COGS = $125,000 × 0.8

So, by putting the value, we get

$41,500 = $32,500 + P - $125,000 × 0.8  

P = $109,000

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.