Asked by Spanky Dixon on Jun 01, 2024
Verified
In September 2016 the management of Rye Company assembles the following data in preparation of budgeted merchandise purchases for the months of October and November.
1. Expected Sales October $1,500,000 November 2,100,000 December 2,700,000\begin{array} { l r } \text { October } & \$ 1,500,000 \\\text { November } & 2,100,000 \\\text { December } & 2,700,000\end{array} October November December $1,500,0002,100,0002,700,000
2. Cost of goods sold is expected to be 70% of sales.
3. Desired ending merchandise inventory is 20% of the next month's cost of goods sold.
4. The beginning inventory at October 1 will be the desired amount.
Instructions
Compute the budgeted merchandise purchases for October and November. Use a columnar format with separate columns for each month.
Merchandise Purchases
The cost of goods bought for resale during a specific accounting period.
Cost of Goods Sold
The direct costs attributable to the production of the goods sold by a company.
Desired Amount
The specific quantity of money or resources that an individual or organization aims to achieve or accumulate.
- Gain insight into the foundational elements and operations necessary for developing budgeted financial documents, encompassing balance sheets and income statements.
- Calculate and comprehend the significance of forecasted sales, expenses of goods sold, and gross margin.
- Gain insight into the process of determining and controlling inventory amounts as part of financial planning.
Verified Answer
LS
Lindsay SidellJun 02, 2024
Final Answer :
October November $1,500,000×70%=$1,050,000$2,100,000×70%=$1,470,000$1,470,000×20%=$294,000$2,700,000×70%×20%=$378,000$1,050,000×20%=$210,000\begin{array}{ll}\text { October }&\text { November }\\\$ 1,500,000 \times 70 \%=\$ 1,050,000 & \$ 2,100,000 \times 70 \%=\$ 1,470,000 \\\$ 1,470,000 \times 20 \%=\$ 294,000 & \$ 2,700,000 \times 70 \% \times 20 \%=\$ 378,000\\\$ 1,050,000 \times 20 \%=\$ 210,000 \end{array} October $1,500,000×70%=$1,050,000$1,470,000×20%=$294,000$1,050,000×20%=$210,000 November $2,100,000×70%=$1,470,000$2,700,000×70%×20%=$378,000
Learning Objectives
- Gain insight into the foundational elements and operations necessary for developing budgeted financial documents, encompassing balance sheets and income statements.
- Calculate and comprehend the significance of forecasted sales, expenses of goods sold, and gross margin.
- Gain insight into the process of determining and controlling inventory amounts as part of financial planning.
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