Purchases Budget in Units and Dollars Budgeted sales of The Music Shop for the f

Question

Purchases Budget in Units and Dollars
Budgeted sales of The Music Shop for the first six months of 2010 are as follows:

Beginning inventory for 2010 is 60,000 units. The budgeted inventory at the end of a month is 40 percent of units to be sold the following month. Purchase price per unit is $7.

Prepare a purchases budget in units and dollars for each month, January through May.

Month Unit Sales Month Unit Sales January 150,000 April 200,000 February 180,000 May 190,000 March 210,000 June 220,000

Explanation / Answer

January February March April May Budgeted Sales                            1,50,000                            1,80,000                            2,10,000                            2,00,000                            1,90,000 Less: beginning Inventory                              -60,000                              -72,000                              -84,000                              -80,000                              -76,000 Add: ending Inventory 180,000*40% = 72,000 210,000*40% = 84,000 200,000*40% = 80,000 190,000*40% = 76,000 220,000*40% = 88,000 Purchases in unit                            1,62,000                            1,92,000                            2,06,000                            1,96,000                            2,02,000 Purchase price per unit                                          7                                          7                                          7                                          7                                          7 Total Purchase price                         11,34,000                         13,44,000                         14,42,000                         13,72,000                         14,14,000

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