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Moore Wholesalers is preparing its merchandise purchases budget. Budgeted sales are $400,000 for April and $480,000...

Moore Wholesalers is preparing its merchandise purchases budget. Budgeted sales are $400,000 for April and $480,000 for May. Cost of goods sold is expected to be 65% of sales. The company’s desired ending inventory is 20% of the following month’s cost of goods sold. Compute the required purchases for April.

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Answer #1
Budgeted cost of goods sold ($400,000 × 65%) $260,000
Add: Desired ending inventory ($480,000 × 65% × 20%) $62,400
Total inventory required $322,400
Less: Beginning inventory ($400,000 × 65% × 20%) $52,000
Required merchandise purchases for April $270,400
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