Final answer:
The formula for determining budgeted merchandise purchases involves the cost of goods sold and adjustments for beginning and ending inventory to ensure proper inventory levels for projected sales.
Step-by-step explanation:
The correct formula for determining budgeted merchandise purchases is: budgeted cost of goods sold + desired ending inventory - beginning inventory. In this context, the budgeted merchandise purchases calculation is critical for businesses to plan their inventory levels effectively.
The equation helps a business predict how much inventory needs to be purchased to meet both the projected sales (reflected in the cost of goods sold) and the desired ending inventory levels while accounting for the inventory that is already available at the beginning of the period.