Chapter 22, Problem 5BPSB

To determine

1.

Introduction:

A purchases budget contains the amount of inventory that a company must purchase during the budget period. The amount stated in the budget is the amount needed to ensure that there is sufficient inventory on hand to meet customer orders for products.

To calculate:

To prepare a merchandise purchases budget (in units) for each product for each of the months of April, May and June respectively.

To determine

2.

Introduction:

A purchases budget contains the amount of inventory that a company must purchase during the budget period. The amount stated in the budget is the amount needed to ensure that there is sufficient inventory on hand to meet customer orders for products.

To determine:

To analyze the business conditions that might lead to inventory levels becoming too high.