Question

you are a manager of a local tractor distributor. you currently sell two versions basic and deluxe. the owner has provided you with the following information:

Budgeted sales for each quarter: 1st quarter- $395000, 2nd quarter-$270000, 3rd quarter- $205000, 4th quarter-$320000

% of sales for each model: Basic- 60%, Deluxe- 40%

cost of sales as a % of sales: Basic- 35%, deluxe- 15%

Ending inventory as a % of the next quarters needs: Basic- 30%, Deluxe-55%

required: based on the above information prepare a separate purchases budget for the basic and deluxe models for 3rd quarter ONLY.

( management accounting)

Answer 1

Purchase Budget
	Q-3
	Basic	Deluxe	Total
Sales (60%,40%) (a)	$123,000	$82,000	$205,000
Cost of Sales (b) (35%Xa),(15%Xa)	$43,050	$12,300
Ending Invntory ( c) (30%*67200), (55%*19200)	$0	$0
Less: Beg Inventory (d) (30%,56700)(16200*55%)	-$17,010	-$8,910
Cost of Purchase (b+c-d)	$26,040	$3,390

Working Note
	Q-2	Q-3	Q-4
	Basic	Deluxe	Total	Basic	Deluxe	Total	Basic	Deluxe	Total
Sales (60%,40%) (a)	$162,000	$108,000	$270,000	$123,000	$82,000	$205,000	$192,000	$128,000	$320,000
Cost of Sales (b) (35%Xa),(15%Xa)	$56,700	$16,200		$43,050	$12,300		$67,200	$19,200
Ending Invntory ( c) (30%*67200), (55%*19200)				$20,160	$10,560
Less: Beg Inventory (d) (30%,56700)(16200*55%)				-$17,010	-$8,910
Cost of Purchase (b+c-d)				$46,200	$13,950