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Gadget Lubricants expects the following sales in units in the last quarter (Oct-Dec) of 2019: Oct...

Gadget Lubricants expects the following sales in units in the last quarter (Oct-Dec) of 2019: Oct 22,000; Nov 29,000; Dec 33,000 and 30,000 for January 2020. The business has inventory of 24,000 finished units on hand at 1st October and has a target finished inventory of 50% of the following month’s sales units. The units are purchased for $10 and sold for $16 each. Payment for purchases is made in the month following purchase. Accounts payable for purchases as at 30 September was $130,000.

The marketing manager has informed the management accountant that she now expects sales in January 2020 to be much higher than anticipated. The management accountant does not think that this will have any effect on the Oct-Dec 2019 purchases budget, as this is beyond the budget period. Do you think that he is correct? Can you think of any figure(s) in the 2019 budget that may need re-evaluating, and if so, why?

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