**Budgeted Purchases Calculation for Pet Beds**Garfield Corporation has projected sales of 1,600 units of pet beds for March and 600 units for April. Each unit is priced at $120.**Inventory Policy:**- Garfield maintains an ending inventory that equals 10% of the following month's sales.**Cost Information:**- The purchase cost per unit from the supplier is $30.**Task:**- Compute the budgeted purchases of pet beds for March.For this calculation, follow these steps:1. **Calculate the Ending Inventory for March:** - Determine 10% of April's expected sales: \[ \text{Ending Inventory for March} = 0.10 \times 600 = 60 \text{ units} \]2. **Determine Total Units Needed for March:** - Add March's sales to the Ending Inventory for March: \[ \text{Total Units Needed} = 1,600 (\text{March sales}) + 60 (\text{Ending Inventory}) \]3. **Compute Beginning Inventory for March:** - As there's no information about the beginning inventory, assume it is 0 for initial computation.4. **Calculate Budgeted Purchases for March:** - Subtract Beginning Inventory from Total Units Needed: \[ \text{Budgeted Purchases} = \text{Total Units Needed} - \text{Beginning Inventory} \] - Multiply the result by $30 per unit to find the total cost.By following these calculations, Garfield Corporation can determine its budgeted purchases for March, ensuring efficient inventory management.

Purchases are budgeted on the basis of estimated sales, required ending inventory and beginning…

Garfield Corporation expects to sell 1,600 units of its pet beds in March and 600 units in April. Each unit sells for $120. Garfield's ending inventory policy is 10 percent of the following month's sales. Garfield pays its supplier $30 per unit. Compute Garfield's budgeted purchases of pet beds for March. Total cost of budgeted purchases

Garfield Corporation expects to sell 1,600 units of its pet beds in March and 600 units in April. Each unit sells for $120. Garfield's ending inventory policy is 10 percent of the following month's sales. Garfield pays its supplier $30 per unit. Compute Garfield's budgeted purchases of pet beds for March. Total cost of budgeted purchases

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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