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.

Required:
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.

Transcribed Image Text:

S124,000 96,000 Jewelry Watches $60,000 51,000