Durango co. desires to maintain an ending inventory equal to 20% of next month's cost of budgeted sales. Assume that Durango Co. maintained this level of ending inventory for the month of September. The cost of budgeted sales for October is $100,000 and the cost of budgeted sales for November is $200,000. Calculate required purchases for the month of October.
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Calculation of Required purchase for the month of October
Budgeted sales of October | $100000 |
Add: Desired ending inventory | 40000 |
Total needed | 140000 |
Less: Beginning inventory | 20000 |
Required purchase for October | $120000 |
Desired ending inventory= $200000*20%= $40000
Beginning inventory= $100000*20%= $20000
Durango co. desires to maintain an ending inventory equal to 20% of next month's cost of...
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