Question

Moore Wholesalers is preparing its merchandise purchases budget. Budgeted sales are $450,000 for April and $480,000 for May. Cost of goods sold is expected to be 63% of sales. The company’s desired ending inventory is 25% of the following month’s cost of goods sold.

Compute the required purchases for April.

Moore Wholesalers Purchases Budget For the Quarter EndedFor the Year EndedFor the Month of April
Required Merchandise Purchases for AprilBeginning InventoryBudgeted Cost of Goods SoldTotal Inventory RequiredDesired Ending InventoryDirect Materials PurchassDesired Ending Direct MaterialsUnits to Be ProducedDirect Materials per Unit		$
AddLess : Units to Be ProducedBeginning InventoryBudgeted Cost of Goods SoldDirect Materials per UnitDesired Ending Direct MaterialsRequired Merchandise Purchases for AprilDesired Ending InventoryDirect Materials PurchassTotal Inventory Required
Units to Be ProducedDirect Materials per UnitDirect Materials PurchassRequired Merchandise Purchases for AprilTotal Inventory RequiredBeginning InventoryBudgeted Cost of Goods SoldDesired Ending Direct MaterialsDesired Ending Inventory
AddLess : Required Merchandise Purchases for AprilDesired Ending InventoryUnits to Be ProducedTotal Inventory RequiredDesired Ending Direct MaterialsDirect Materials PurchassDirect Materials per UnitBeginning InventoryBudgeted Cost of Goods Sold
Total Inventory RequiredDirect Materials per UnitDirect Materials PurchassRequired Merchandise Purchases for AprilUnits to Be ProducedBudgeted Cost of Goods SoldBeginning InventoryDesired Ending Direct MaterialsDesired Ending Inventory		$

Answer 1

Moore Wholesalers Purchase Budget For the month April Budgeted Cost of Goods sold Add: Desired Ending Inventory Total Inventory required Less: Beginning Inventory Required Merchandise Purchases 283500 75600 359100 -70875 288225 Working notes: Budgeted sales are: $450,000 for april * 63% = $283,500 cost of goods sold $480,000 for may * 63% = $302,400 Cost of goods sold $283,500 * 25% = $70875 April Beginning Inventory $302,400 * 25% = $75600 April ending inventory