Ask Question
17 January, 22:26

Lexi Company forecasts unit sales of 1,600,000 in April, 1,280,000 in May, 930,000 in June, and 1,620,000 in July. Beginning inventory on April 1 is 280,000 units, and the company wants to have 40% 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.

+5
Answers (1)
  1. 17 January, 22:29
    0
    Month April May June

    Purchases budget 1,832 1,140 1,206

    Explanation:

    Purchase budget is determined as follows:

    Sales budget + closing inventory - opening inventory

    '000

    Month April May June July

    Sales Units 1,600 1,280 930 1,620

    Opening inventory (280) (512) (372)

    Closing inv. (40% of next mth) 512 372 648

    Purchase budget 1,832 1,140 1,206

    Note that the closing inventory for a particular becomes the opening inventory for the next following month.

    For example, the closing inventory figure of April (512) is the opening inventory for May.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Lexi Company forecasts unit sales of 1,600,000 in April, 1,280,000 in May, 930,000 in June, and 1,620,000 in July. Beginning inventory on ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers