Question

Lexi Company forecasts unit sales of 1,040,000 in April, 1,220,000 in May, 980,000 in June, and 1,020,000 in July. Beginning inventory on April 1 is 280,000 units, and the company wants to have 30% of next month’s sales in inventory at the end of each month. Prepare a merchandise purchases budget for the months of April, May, and June.

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

Lexi Company forecasts unit sales of 1,040,000 in April, 1,220,000 in May, 980,000 in June, and 1,020,000 in July. Beginning inventory on April 1 is 280,000 units, and the company wants to have 30% of next month’s sales in inventory at the end of each month.

April:

Sales= 1,040,000 units

Ending inventory= (0.30*1,220,000)= 366,000

Begining inventory= 280,000 (-)

Total purchase= 1,126,000 units

May:

Sales= 1,220,000 units

Ending inventory= (0.30*980,000)= 294,000

Begining inventory= 366,000 (-)

Total purchase= 1,148,000 units

June:

Sales= 980,000 units

Ending inventory= (0.30*1,020,000)= 306,000

Begining inventory= 294,000 (-)

Total purchase= 992,000 units