Required: 1. Prepare a merchandise purchases budget (in units only) for each product for each of the months of March, April, and May.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Keggier's Supply is a merchandiser of three different products. Beginning inventories for March are footwear, 20,000 units, sports
gear, 80,000 units, and apparel, 50,000 units. Management believes each of these inventories is too high and begins a new policy that
ending Inventory in any month should equal 30% of the budgeted sales units for the following month. Budgeted sales units for March,
April, May, and June follow.
Footwear
Sports gear
Apparel
FOOTWEAR
Budgeted Sales in Units
April
May
32,000
95,000
40,000 35,000 37,000
Required:
1. Prepare a merchandise purchases budget (in units only) for each product for each of the months of March, April, and May.
March
15,000 25,000
70,000 90,000
Budgeted sales units
Add Desired ending inventory
SPORTS GEAR
Next period budgeted sales units
Ratio of ending inventory to future sales
Desired ending inventory
Total required units
Less Beginning inventory units
Units to purchase
Budgeted sales units
Add Desired ending inventory
APPAREL
Next period budgeted sales units
Ratio of ending inventory to future sales
Desired ending inventory
Total required units
Less Beginning inventory unts
Unts to purchase
June
35,000
90,000
25,000
KEGGLER'S SUPPLY
Merchandise Purchases Budget
March
Budgeted sales units
25,000
30%
25,000
90.000
April
32,000
0
32,000
95.000
May
35,000
35,000
90,000
Transcribed Image Text:Keggier's Supply is a merchandiser of three different products. Beginning inventories for March are footwear, 20,000 units, sports gear, 80,000 units, and apparel, 50,000 units. Management believes each of these inventories is too high and begins a new policy that ending Inventory in any month should equal 30% of the budgeted sales units for the following month. Budgeted sales units for March, April, May, and June follow. Footwear Sports gear Apparel FOOTWEAR Budgeted Sales in Units April May 32,000 95,000 40,000 35,000 37,000 Required: 1. Prepare a merchandise purchases budget (in units only) for each product for each of the months of March, April, and May. March 15,000 25,000 70,000 90,000 Budgeted sales units Add Desired ending inventory SPORTS GEAR Next period budgeted sales units Ratio of ending inventory to future sales Desired ending inventory Total required units Less Beginning inventory units Units to purchase Budgeted sales units Add Desired ending inventory APPAREL Next period budgeted sales units Ratio of ending inventory to future sales Desired ending inventory Total required units Less Beginning inventory unts Unts to purchase June 35,000 90,000 25,000 KEGGLER'S SUPPLY Merchandise Purchases Budget March Budgeted sales units 25,000 30% 25,000 90.000 April 32,000 0 32,000 95.000 May 35,000 35,000 90,000
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