Question

9. Chrissy's Campus started August 1 at $65,000. This amount was $8,000 over the planned BOM stock figure. When the merchandise manager reviewed the purchase journal, he told the buyer to cancel orders to avoid being overbought. Look at the following figures and determine how much Chrissy's Campus would be overbought if the buyer does not cancel any orders. Planned BOM $57,000 Actual BOM $65,000 Planned sales $32,000 Planned markdowns $ 6,500 Planned EOM $48,000 Purchases on order $31,500 Would the store have been overbought if the operation had come in on the planned BOM figure? What would the figures be? Based on these figures, what are some areas that you would research to un- derstand the stock coming in over plan?

Answer 1

Solution:

Planned Purchases = [Planned sales + EOM stock - BOM stock] = [32,000 + 6,500 + 48,000 - 65,000] = 21,500

Planned purchases at retail - Orders already placed for the month = [21,500 - 31,500] = -$10,000

Thus it is overbought by $10,000

Planned Purchases = [Planned sales + EOM stock - BOM stock] = [32,000 + 6,500 + 4,8000 - 57,000] = $29,500

Planned purchases at retail - Orders already placed for the month = [29,500 - 31,500] = -$2,000

When the stock had come on the plan, it would still have been overbought for $2,000