Packer Company expects to sell 4,500 units for $180 each for a total of $810,000 in January and 5,000 units for $220 each for a total of $1,100,000 in February.The company expects cost of goods sold to average 70% of sales revenue, and the company expects to sell 4,600 units in March for $270 each.Packer's target ending inventory is $20,000 plus 50% of the next month's cost of goods sold. Prepare Packer's inventory, purchases, and cost of goods sold budget for January and February. Packer Company Inventory, Purchases, and Cost of Goods Sold Budget Two months Ended January 31 and February 28 January February Cost of goods sold ----------------------------------------------------------------------------------------------------------------------------------------- Plus: Desired ending merchandise inventory ----------------------------------------------------------------------------------------------------------------------------------------- Total merchandise inventory required ----------------------------------------------------------------------------------------------------------------------------------------- Less: Beginning merchandise inventory ----------------------------------------------------------------------------------------------------------------------------------------- Budgeted purchases
Packer Company expects to sell 4,500 units for $180 each for a total of $810,000 in January and 5,000 units for $220 each for a total of $1,100,000 in February.The company expects cost of goods sold to average 70% of sales revenue, and the company expects to sell 4,600 units in March for $270 each.Packer's target ending inventory is $20,000 plus 50% of the next month's cost of goods sold. Prepare Packer's inventory, purchases, and cost of goods sold budget for January and February. Packer Company Inventory, Purchases, and Cost of Goods Sold Budget Two months Ended January 31 and February 28 January February Cost of goods sold ----------------------------------------------------------------------------------------------------------------------------------------- Plus: Desired ending merchandise inventory ----------------------------------------------------------------------------------------------------------------------------------------- Total merchandise inventory required ----------------------------------------------------------------------------------------------------------------------------------------- Less: Beginning merchandise inventory ----------------------------------------------------------------------------------------------------------------------------------------- Budgeted purchases
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Question
Packer Company expects to sell 4,500 units for $180 each for a total of $810,000 in January and 5,000 units for $220 each for a total of $1,100,000 in February.The company expects cost of goods sold to average
70% of sales revenue, and the company expects to sell 4,600 units in
March for $270 each.Packer's target ending inventory is $20,000 plus 50% of the next month's cost of goods sold. Prepare Packer's inventory, purchases, and cost of goods sold budget for January and February.
Packer Company
Inventory, Purchases, and Cost of Goods Sold Budget
Two months Ended January 31 and February 28
January February
Cost of goods sold
-----------------------------------------------------------------------------------------------------------------------------------------
Plus: Desired ending merchandise inventory
-----------------------------------------------------------------------------------------------------------------------------------------
Total merchandise inventory required
-----------------------------------------------------------------------------------------------------------------------------------------
Less: Beginning merchandise inventory
-----------------------------------------------------------------------------------------------------------------------------------------
Budgeted purchases
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