Production Manager, Sally, at Armidale Innovations is making a budget for the ra
ID: 2800635 • Letter: P
Question
Production Manager, Sally, at Armidale Innovations is making a budget for the raw materials purchases for 2017. She acquired the following budgeted sales information for 2017 from the Sales Manger, Joe:
Month Budgeted Sales $
June 57,000
July 48,000
August 37,000
September 67,000
October 69,000
As per the information obtained from the Operations Manager, Kelly, the cost of goods sold rate for the company is 69% and the desired ending inventory level for each month is 31% of next month's cost of goods sold figure.
Required: Make a ‘purchases budget’ for July, August and September, 2017, showing the total for the three months in the ‘total’ column. Must use the following format/table (show supporting calculations/working separately before or after the format/table): Round all figures to the nearest dollar.
Purchases budget
July Aug Sept
Total Cost of Goods Sold……………………
Ending inventory (desired level)………
Total needed…………………….
Beginning inventory…………………..
Total purchases…………………
Explanation / Answer
Armidale Innovations
Purchases Budget
For July, August and September 2017
July August September October $ $ $ $ Budgeted Cost of Goods Sold ( 69% of Sales) 33,120 25,530 46,230 47,610 Desired Ending Inventory ( 31 % of next month COGS) 7,914 14,331 14,759 Total Inventory Needed 41,034 39,861 60,989 Less: Beginning Inventory 10,267 7,914 14,331 Budgeted Purchases 30,767 31,947 46,658Related Questions
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