Question

If budgeted beginning inventory is $9,300, budgeted ending inventory is $10,600, and budgeted cost of goods sold is $11,260, budgeted purchases should be:_____.

Answer 1

The purchase budget is $12,560.

What is the purchase budget?

• A purchase budget is created to keep track of the value of the company's inventory and the number of goods sold.
• It is also used to keep track of your monthly desired ending inventory value.
• The purchase budget is frequently only a portion of a company's overall budget and is frequently found in the company's master budget.
• Setting a purchasing budget is the foundation of your business.
• It enables you to track your spending habits, set goals and pars, monitor when you exceed those goals, and recover from unexpected events or expenses.
• The budget is developed using a straightforward formula: the desired ending inventory plus the cost of goods sold less the value of the beginning inventory.
• This equation calculates your total purchase budget.

To find the purchase budget:

• (10,600 + 11,260) - 9300
• 21,860 - 9,300
• $12,560

Therefore, the purchase budget is $12,560.

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