Final answer:
To calculate the Music Shop's purchases budget, we need sales projections to determine monthly purchase units and corresponding purchase dollars based on the price per unit. Without the necessary sales data, we cannot choose an option with confidence.
Step-by-step explanation:
To prepare a purchases budget for the Music Shop from January through May 2010, we need to calculate both the units to be purchased and the cost for each month.
Since the budgeted inventory at the end of each month is 40 percent of the units to be sold the following month, we would also need to know the expected sales for each month, which are not provided in the question. However, let's assume this information was given or can be estimated based on other data. The purchase units for any given month would be determined based on the needed inventory for the next month minus the ending inventory from the current month plus what was sold, while ensuring the purchase dollars amount to the purchase units multiplied by the purchase price per unit, which is $7 in this case.
For instance, if February's sales are forecasted to be 50,000 units, January's required ending inventory would be 20,000 units (40% of 50,000). If January's starting inventory is 60,000 units and we assume no sales in January, we would not need to purchase any additional units in January, making both purchase units and purchase dollars $0. For subsequent months, similar calculations would be made based on projected sales data.
If sales projections and calculations of products were more complex, with varying prices, the total spent could result in more precise figures such as $17,147.51 or $27,654.92 over a year. Budgeting requires careful planning and calculation, so let's assume the information provided in the question is accurate to select the correct option.