Required: 1. Prepare a merchandise purchases budget (in units only) for each product for each of the months of March, April, and May.
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.
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F60250f78-b706-44e1-923c-35253645e3cc%2F15c209f6-2c98-408f-8229-27d91eace9f5%2Ff2v4hap_processed.jpeg&w=3840&q=75)
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