[The following information applies to the questions displayed below.] Formworks

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[The following information applies to the questions displayed below.]

Formworks Company prepares monthly budgets. The current budget plans for a September ending inventory of 30,000 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the three most recent months follow.

24.

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Prepare the merchandise purchases budget for the months of July, August, and September. (Input all amounts as positive values. Omit the "%" sign in your response.)

  

25.

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Compute the ratio of ending inventory to the next month’s sales for each budget prepared in part 1. (Omit the "%" sign in your response.)

  

26.

Required information

Formworks Company prepares monthly budgets. The current budget plans for a September ending inventory of 30,000 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the three most recent months follow.

Explanation / Answer

The ending inventory for September is given 30,000 units and purchase for septemebt were(280,000- 268,000)

$12,000 less than the units sold that means opening inventory for Septemebt or closing inventory for Auguts is 30,000+12,000 = 42,000

Which is 42,000/280,000   = 15% of september sales

2) Ratio = 15%

3) Budgeted sales for October = 30,000/15% = $200,000

July August September opening 24,000 48,000 42,000 Add: purchases 184,000 314,000 268,000 Avaialable 208,000 362,000 310,000 less: Ending 48,000 42,000 30,000 Sales 160,000 320,000 280,000

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