Your company, Home Products Ltd., is preparing budgets for the fiscal year ended December 31, 2014, to help manage the company. During the preceding fiscal year, 2013, sales totalled $1,777 million and cost of goods sold was $1,175 million. At December 31, 2013, inventory stood at $366 million.
During the upcoming 2014 year, suppose you expect cost of goods sold to increase by 8%. The company budgets next year's ending inventory at $369 million.
Requirement
One of the most important decisions you make is how much inventory to buy. How much inventory will you purchase during the upcoming year to reach your budgeted figures?