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 5% of next month’s projected sales.

I did question 1, I need help with #2. Thanks!

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Answer #1

Answer:-2)-

Purchase Budget (1st Quarter)
Particulars January Febeuary March Total
Budgeted Sales units 90000 80000 70000 240000
Add:- Ending inventory
5% of next month's projected sales 80000*5%=4000 70000*5%=3500 40000*5%=2000 9500
Less:- Opening inventory 90000*5%=4500 4000 3500 12000
Units to be purchased 89500 79500 68500 237500
Purchase price per unit $15 $15 $15 $15
Purchace cost $ 1342500 1192500 1027500 3562500
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