Formworks Company makes monthly budgets. The present budget plans for a September ending inventory of 15,000 units. Company policy is to end each month with merchandise inventory equivalent to a specified percent of budgeted sales for the given month. Budgeted sales and merchandise purchases for the three most recent months as:
Sales (units) Purchases (units)
July 120,000 138,000
August 210,000 204,000
September 180,000 159,000
a) Make the merchandise purchases budget for the months of July, August, and September.
b) Calculate the ratio of ending inventory to the next month's sales for each budget made in part 1.
c) Determine the number of units which are budgeted for sale in October?