alermo Wholesalers is preparing its merchandise purchases budget. Budgeted sales are $500,000 for April and $575,000 for May. Cost of goods sold is expected to be 70% of sales. The company’s desired ending inventory is 18% of the following month’s cost of goods sold. Compute the required purchases for April.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Palermo Wholesalers is preparing its merchandise purchases budget. Budgeted sales
are $500,000 for April and $575,000 for May. Cost of goods sold is expected to be 70% of sales.
The company’s desired ending inventory is 18% of the following month’s cost of goods sold.
Compute the required purchases for April.
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