Precious Stones, 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 60% and 37.5%, respectively. The sales forecast for the next two months for each product category is as follows:

The company’s policy, which is expected to be achieved at the end of April, is to have ending inventory equal to 200% of the next month’s cost of goods sold.

a. Calculate the cost of goods sold for jewelry and watches for May and June.
b. Calculate a purchases budget, in dollars, for each product for the month ofMay.

  • CreatedOctober 07, 2013
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