Walker Company prepares monthly budgets. The current budget plans for a September ending inventory of 28,500 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow.
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(1) Prepare the merchandise purchases budget for the months of July, August, and September.
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WALKER COMPANY
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Merchandise Purchases Budget
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For July, August, and September
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July
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August
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September
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Budgeted ending inventory units
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28,500
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Required units of available inventory
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Units to be purchased
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198,000
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300,000
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283,500
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(2) Compute the ratio of ending inventory to the next month's sales.
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July
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August
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September
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Budgeted ending inventory units
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28,500
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Next month's budgeted sales
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Ratio of inventory to next month's sales
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(3) How many units are budgeted for sale in October?
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Units budgeted for sale in October
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Sales (Units) |
Purchases (Units) |
| July |
180,000 |
198,000 |
| August |
300,000 |
300,000 |
| September |
300,000 |
283,500 |