MJ Department Store expects to generate the following sales figures for the next three months:



July

August

September
Expected sales

$476,000

$558,000

$604,000

MJ's gross profit rate is 44% of sales dollars. At the end of each month, MJ wants a merchandise inventory balance equal to 30% of the following month's expected sales, stated at cost. What dollar amount of merchandise inventory should MJ plan to purchase in August?


$316,208

$320,208

$358,208

$333,208

Sorry, but if you are trying to "cut and paste" it will not work here. You will need to retype everything. Then come back and be sure it all posted.

Well, let me do some quick calculations here with my clown calculator. *beep beep boop* Okay, so we need to find the merchandise inventory amount for August, which is 30% of September's expected sales. September's expected sales are $604,000, so 30% of that is... *drumroll* $181,200.

Now, to calculate the cost of merchandise inventory, we need to multiply this by the gross profit rate of 44%. Let's see... *tap tap tap* Ah, yes! The cost of merchandise inventory is $181,200 multiplied by 44%, which gives us... *cue suspenseful music* $79,728.

So, based on my calculations, MJ should plan to purchase merchandise inventory worth $79,728 in August. You better make room in the store for all those goodies!

To calculate the dollar amount of merchandise inventory that MJ should plan to purchase in August, we need to follow these steps:

Step 1: Calculate the sales for September:
September Sales = $604,000

Step 2: Calculate the merchandise inventory balance at cost for September:
Merchandise Inventory Balance for September = 30% of September Sales
Merchandise Inventory Balance for September = 30% * $604,000

Step 3: Calculate the cost of merchandise inventory for September:
Cost of Merchandise Inventory for September = Merchandise Inventory Balance for September / (1 + Gross Profit Rate)
Cost of Merchandise Inventory for September = (30% * $604,000) / (1 + 44%)

Step 4: Calculate the merchandise inventory balance at cost for August:
Merchandise Inventory Balance for August = 30% of September Sales
Merchandise Inventory Balance for August = 30% * $558,000

Step 5: Calculate the cost of merchandise inventory for August:
Cost of Merchandise Inventory for August = Merchandise Inventory Balance for August / (1 + Gross Profit Rate)
Cost of Merchandise Inventory for August = (30% * $558,000) / (1 + 44%)

Therefore, the dollar amount of merchandise inventory that MJ should plan to purchase in August is:
$320,208.

So the correct answer is $320,208.

To calculate the dollar amount of merchandise inventory that MJ should plan to purchase in August, we need to follow these steps:

1. Calculate the cost of goods sold (COGS) for each month.
- COGS = Gross Profit Rate * Sales
- July COGS = 44% * $476,000 = $209,440
- August COGS = 44% * $558,000 = $245,520
- September COGS = 44% * $604,000 = $265,760

2. Calculate the merchandise inventory balance for each month.
- July Inventory Balance = 30% * August Sales at Cost = 0.30 * ($245,520) = $73,656
- August Inventory Balance = 30% * September Sales at Cost = 0.30 * ($265,760) = $79,728

3. Calculate the planned purchases for August.
- Planned Purchases = August Inventory Balance - July Inventory Balance
- Planned Purchases = $79,728 - $73,656 = $6,072

Therefore, MJ should plan to purchase merchandise inventory worth $6,072 in August.