Question

Lexi Company forecasts unit sales of 1,640,000 in April, 1,250,000 in May, 810,000 in June, and 1,650,000 in July. Beginning inventory on April 1 is 250,000 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

Step-by-step explanation:

From the information given in the question:

The main objective is to Prepare a merchandise purchases budget for the months of April, May, and June

Merchandise Purchases Budget

April May June

Next months' budgeted 1250000 810000 1650000

Sales

Ratio of inventory 30% 30% 30%

Desired ending inventory 375000 243000 495000

Sales unit 1640000 1250000 810000

Required units of

available inventory 2015000 1493000 1305000

Less:Beginning Inventory -250000 - 375000 - 243000

Units to be purchased 1765000 1118000 1062000

N:B

Desired ending inventory = Next months' budgeted sales × Ratio of inventory

Required units of available inventory = Desired ending inventory + Sales unit