Question

1. Prepare a sales budget for January through May. The selling price per unit is $40.00....

1. Prepare a sales budget for January through May. The selling price per unit is $40.00.

December of the previous year 40,000

January 90,000

February 80,000

March 70,000

April 40,000

2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only sells one product that can be purchased at $15.00 per unit. The market for this product is very competitive and customers highly value service such as quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 90% of next month’s projected sales.

I already did question #1, I need help with question #2.

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Answer #1
1 Purchase Budget: Jan Feb Mar Total Q1 Jan Feb Mar
Sales Units 90000 80000 70000 240000
Add: Closing Inventory Desired(90% of Next Month Sales) 72000 63000 36000 36000 80000*90% 70000*90% 40000*90%
Total Required Units 162000 143000 106000 276000
Less: Opening Units 81000 72000 63000 81000 90000*90% 80000*90% 70000*90%
Purchase Budget in Units 81000 71000 43000 195000
Puchase Rate 15.00 15.00 15.00 15.00
Purchase Budget in Value 1215000 1065000 645000 2925000

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