Company A, a merchandising firm, has budgeted sales for the third quarter of the year:
July: ......... 80,000
August: ......... 90,000
September: ....... 70,000
Cost of goods sold equals 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the cost of goods sold for the following month. The inventory on June 30th is less than this ideal since it is only 65,000. The company is now preparing a merchandise budget.
Calculate the following:
a. What are the budgeted purchases for July?
b. What is the desired inventory for September?