Exercise 14-10 Preparing inventory purchases budgets with different assumptions

Question

Exercise 14-10 Preparing inventory purchases budgets with different assumptions LO 14-3

Executive officers of Weston Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources.

     Weston’s past experience indicates that cost of goods sold is about 55 percent of sales revenue. The company tries to maintain 15 percent of the next quarter’s expected cost of goods sold as the current quarter’s ending inventory. This year’s ending inventory is $31,000. Next year’s ending inventory is budgeted to be $32,000.

Prepare an inventory purchases budget using the marketing consultant’s estimate.

Executive officers of Weston Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources.

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Exercise 14-10 Preparing inventory purchases budgets with different assumptions

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