Caskill Company Forecasts $40 000 of Sales in January, $38

Multiple Choice

Caskill Company forecasts $40 000 of sales in January, $38 000 in February, $30 000 in March, and $32 000 in April. Cost of sales is budgeted at 75% of sales. Caskill should have inventory on hand at the end of each month equal to $5 000 plus 20% of the following month's cost of sales. How much are budgeted purchases for January?

A) $27 300
B) $22 800
C) $24 900
D) $29 700