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Keggler’s Supply is a merchandiser of three different products. The company’s February 28 inventories are footwear,...

Keggler’s Supply is a merchandiser of three different products. The company’s February 28 inventories are footwear, 20,000 units; sports equipment, 80,000 units; and apparel, 50,000 units. Management believes each of these inventories is too high. As a result, a new policy dictates that ending inventory in any month should equal 30% of the expected unit sales for the following month. Expected sales in units for March, April, May, and June follow.
  

Budgeted Sales in Units
March April May June
Footwear 15,000 25,000 32,000 35,000
Sports equipment 70,000 90,000 95,000 90,000
Apparel 40,000 38,000 37,000 25,000


Required:
1. Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and May.

KEGGLER’S SUPPLY
Merchandise Purchases Budget
For March, April, and May
March April May
FOOTWEAR
Budgeted sales for next month
Ratio of ending inventory to future sales
0
Required units of available merchandise
Budgeted purchases
SPORTS EQUIPMENT
Budgeted sales for next month
Ratio of ending inventory to future sales
Required units of available merchandise
Budgeted purchases
APPAREL
Budgeted sales for next month
Ratio of ending inventory to future sales
Required units of available merchandise
Budgeted purchases
business   accounting   
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Answer #1
KEGGLER’S SUPPLY
Merchandise Purchases Budget
For March, April, and May
March April May
FOOTWEAR
Budgeted sales for next month     15,000.0       25,000.0       32,000.0
Ratio of ending inventory to future sales               0.3                 0.3                 0.3
Desired Ending Inventory       7,500.0         9,600.0       10,500.0
Required units of available merchandise     22,500.0       34,600.0       42,500.0
Beginning Inventory     20,000.0         7,500.0         9,600.0
Budgeted purchases       2,500.0       27,100.0       32,900.0
SPORTS EQUIPMENT
Budgeted sales for next month     70,000.0       90,000.0       95,000.0
Ratio of ending inventory to future sales               0.3                 0.3                 0.3
Desired Ending Inventory     27,000.0       28,500.0       27,000.0
Required units of available merchandise     97,000.0     118,500.0     122,000.0
Beginning Inventory     80,000.0       27,000.0       28,500.0
Budgeted purchases     17,000.0       91,500.0       93,500.0
APPAREL
Budgeted sales for next month     40,000.0       38,000.0       37,000.0
Ratio of ending inventory to future sales               0.3                 0.3                 0.3
Desired Ending Inventory     11,400.0       11,100.0         7,500.0
Required units of available merchandise     51,400.0       49,100.0       44,500.0
Beginning Inventory     50,000.0       11,400.0       11,100.0
Budgeted purchases       1,400.0       37,700.0       33,400.0
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