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Company policy is to end each month with merchandise

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Walker Company prepares monthly budgets. The current budget plans for a September ending inventory of 28,500 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.

WALKER COMPANY

Merchandise Purchases Budget

For July, August, and September

July

August

September

Budgeted ending inventory units

28,500

Required units of available inventory

Units to be purchased

198,000

300,000

283,500

(2) Compute the ratio of ending inventory to the next month's sales.

July

August

September

Budgeted ending inventory units

28,500

Next month's budgeted sales

Ratio of inventory to next month's sales

(3) How many units are budgeted for sale in October?

Units budgeted for sale in October

  Sales (Units) Purchases (Units)
  July 180,000 198,000
  August 300,000 300,000
  September 300,000 283,500

Reference no: EM131767628

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