Walker Company prepares monthly budgets. The current budget plans for a Septembe

Question

Walker Company prepares monthly budgets. The current budget plans for a September ending inventory of 42,000 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. (1) Prepare the merchandise purchases budget for the months of July, August, and September. (2) Compute the ratio of ending inventory to the next month's sales. (3) How many units are budgeted for sale in October?

Explanation / Answer

(1)

(2) Ratio of ending inventory with the next month's Sales:

(3) october sales = $210000

July August September Budgeted ending inventory units 66000 54000 42000 Budgeted Sales 170000 330000 270000 Required units of available inventory 236000 384000 312000 Opening Stock 34000 66000 54000 Purchases 202000 318000 258000

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