Purchases budget-analytical
Response to the following problem:
Precious Stones, Ltd., is a retail jeweler. Most of the firm's business is in jewelry and watches. The firm's average gross profit ratio for jewelry and watches is 60% and 37.5%, respectively. The sales forecast for the next two months for each product category is as follows:
Jewelry Watches
May..................................................................... $124,000 $60,000
June ....................................................................... 96,000 51,000
Required:
a. Calculate the cost of goods sold for jewelry and watches for May and June.
b. Calculate a purchases budget, in dollars, for each product for the month of May.