Reference no: EM131814467

Question - Purchases budget-analytical Jewels and Diamonds, Ltd., is a retail jeweler. Most of the firm's business is in jewelry and watches. The firm's average gross profit ratio for jewelry and watches is 75% and 35%, respectively. The sales forecast for the next two months for each product category is as follows:

Jewelry Watches

November . . . . . . . . . . . . . . . . . . . . . . . . . . $372,000 $1 80,000

December . . . . . . . . . . . . . . . . . . . . . . . . . . 288,000 1 53,000

The company's policy, which is expected to be achieved at the end of October, is to have ending inventory equal to 150% of the next month's cost of goods sold.

Required:

a. Calculate the cost of goods sold for jewelry and watches for November and December.

b. Calculate a purchases budget, in dollars, for each product for the month of November.