Executive officers of Weston Company are wrestling with their budget for the next year. The following are

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Executive officers of Weston Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources.

Source of Estimate First Quarter Second Quarter Third Quarter Fourth Quarter Sales manager Marketing consultant $360,000


Weston’s past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 10 percent of the next quarter’s expected cost of goods sold as the current quarter’s ending inventory. This year’s ending inventory is $30,000. Next year’s ending inventory is budgeted to be $36,000.


Required

a. Prepare an inventory purchases budget using the sales manager’s estimate.

b. Prepare an inventory purchases budget using the marketing consultant’s estimate.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Related Book For  book-img-for-question

Fundamental Managerial Accounting Concepts

ISBN: 978-0078025655

7th edition

Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old

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