Executive officers of Baird Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources. Source of Estimate Sales manager Marketing consultant First Quarter $ 379,000 518,000 Second Quarter $ 307,000 468,000 Third Quarter $ 287,000 417,000 Fourth Quarter $ 485,000 641,000 Baird's past experience indicates that cost of goods sold is about 65 percent of sales revenue. The company tries to maintain 15 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $23,000. Next year's ending inventory is budgeted to be $24,000. Required a. Prepare an inventory purchases budget using the sales manager's estimate. b. Prepare an inventory purchases budget using the marketing consultant's estimate.
Executive officers of Baird Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources. Source of Estimate Sales manager Marketing consultant First Quarter $ 379,000 518,000 Second Quarter $ 307,000 468,000 Third Quarter $ 287,000 417,000 Fourth Quarter $ 485,000 641,000 Baird's past experience indicates that cost of goods sold is about 65 percent of sales revenue. The company tries to maintain 15 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $23,000. Next year's ending inventory is budgeted to be $24,000. Required a. Prepare an inventory purchases budget using the sales manager's estimate. b. Prepare an inventory purchases budget using the marketing consultant's estimate.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Executive officers of Baird Company are wrestling with their budget for the next year. The following are two different sales estimates
provided by two different sources.
Source of Estimate
Sales manager
Marketing consultant
First Quarter
$ 379,000
518,000
Second Quarter
$ 307,000
468,000
Third Quarter
$ 287,000
417,000
Fourth Quarter
$ 485,000
641,000
Baird's past experience indicates that cost of goods sold is about 65 percent of sales revenue. The company tries to maintain 15
percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is
$23,000. Next year's ending inventory is budgeted to be $24,000.
Required
a. Prepare an inventory purchases budget using the sales manager's estimate.
b. Prepare an inventory purchases budget using the marketing consultant's estimate.
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