Answer:
<u>Cost of Goods Sold Budget</u>
October November
Cost of Goods Sold $1,568,000 $1,664,600
<u>Inventory Budget</u>
October November
Total $752,920 $772,800
<u>Purchase Budget</u>
October November
Budgeted Purchases $2,259,320 $2,397,880
Explanation:
<u>Cost of Goods Sold Budget</u>
Gross Profit Margin = 30% therefore Markup is 70%
October November December
Sales $2,240,000 $2,378,000 $2,520,000
Cost of Goods Sold (70%) $1,568,000 $1,664,600 $1,764, 000
<u>Inventory Budget</u>
October November
Base Amount $420,000 $420,000
Based on Sales (20%) $332,920 $352,800
Total $752,920 $772,800
<u>Purchase Budget</u>
October November
Budgeted Sales $2,240,000 $2,378,000
Add Budgeted Closing Inventory $752,920 $772,800
Total Purchases Needed $2,992,920 $3,150,800
Less Budgeted Opening Inventory ($733,600) ($752,920)
Budgeted Purchases $2,259,320 $2,397,880
September Closing Stock is October`s Opening Stock
Therefore September Closing Stock = $420,000 + $1,568,000 × 20%
= $733,600
