Keggler\'s Supply is a merchandiser of three different products. The company\'s

Question

Keggler's Supply is a merchandiser of three different products. The company's February 28 inventories are footwear, 20,000 units; sports equipment, 79,000 units; and apparel, 49,000 units. Management believes that excessive inventories have accumulated for all three products. As a result, a new policy dictates that ending inventory in any month should equal 30% of the expected unit sales for the following month. Expected sales in units for March, April, May, and June follow. Budgeted Sales in Units Footwear Sports equipment Apparel March April May June 15,500 26,000 34,000 33,500 70,500 91,500 95,500 89,500 40,500 38,000 32,000 22,000 Required: 1. Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and May.

Explanation / Answer

Kegglers Supply Merchandise Purchase Budget For March, April and May March April May Footwear Budgeted Sales for Next Month 15500 26000 34000 Ratio of ending inventoryto futuresales 30% 30% 30% Required units of available Merchandise 7800 10200 10050 Budgeted Purchases 23300 36200 44050 Sports Equipment Budgeted Sales for Next Month 70500 91500 95500 Ratio of ending inventoryto futuresales 30% 30% 30% Required units of available Merchandise 27450 28650 26850 Budgeted Purchases 97950 120150 122350 Apparel Budgeted Sales for Next Month 40500 38000 32000 Ratio of ending inventoryto futuresales 30% 30% 30% Required units of available Merchandise 11400 0 9600 6600 Budgeted Purchases 51900 47600 38600

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