Metro, Inc. sells backpacks. The Company's accountant is preparing the purchases budget for the first quarter operations. Metro maintains ending inventory at 20% of the following month's expected cost of goods sold. Expected cost of goods sold for April is $79,000. Sales January February March Budgeted cost of goods sold $ 44,500 $ 59,000 $ 64,500 Plus: Desired ending inventory 11,800 Inventory needed 56,300 Less: Beginning inventory (8,900 ) Required purchases $ 47,400 Based on this information the total amount of expected purchases for February is
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.
Metro, Inc. sells backpacks. The Company's accountant is preparing the purchases budget for the first quarter operations. Metro maintains ending inventory at 20% of the following month's expected cost of goods sold. Expected cost of goods sold for April is $79,000.
| Sales | January | February | March | ||||||
| Budgeted cost of goods sold | $ | 44,500 | $ | 59,000 | $ | 64,500 | |||
| Plus: Desired ending inventory | 11,800 | ||||||||
| Inventory needed | 56,300 | ||||||||
| Less: Beginning inventory | (8,900 | ) | |||||||
| Required purchases | $ | 47,400 | |||||||
Based on this information the total amount of expected purchases for February is
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