Exercise 194 In May 2016, the budget committee of Crater, Inc. assembles the fol

Question

Exercise 194 In May 2016, the budget committee of Crater, Inc. assembles the following data in preparation of budgeted merchandise purchases for the month of June. 1. Expected sales: June $750,000, July $900,000 2. Cost of goods sold is expected to be 80% of sales. 3. Desired ending merchandise inventory is 40% of the following (next) month's cost of goods sold. 4. The beginning inventory at June 1 will be the desired amount. Compute the budgeted merchandise purchases for June. CRATER, INC. Merchandise Purchases Budget For the Month Ending June 30, 2016

Explanation / Answer

CRATER, INC.

Merchandise Purchase Budget

For the month ending June 30,2016

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CRATER, INC.

Budgeted Income Statement

For the month ending June 30, 2016

Cost of goods sold (750,000*0.8) 600,000 Add : Ending inventory (900,000*0.8*0.4) 288,000 Total Inventory needed 888,000 less : Beginning inventory (750,000*0.8*0.4) 240,000 Purchases 648,000

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