Answer:
Required purchase for October = $110,000
Explanation:
Given:
Ending inventory = 10% of next month's budgeted sales
Budgeted sales for October = $100,000
Budgeted sales for November = $200,000
Purchase for the month of October = ?
Calculation of Required purchase for the month of October
:
Particular Amount
Budgeted sales of October $100,000
<u>Add</u><u>: Desired ending inventory($200,000 x 10%) $20,000
</u>
<u>Total Inventory needed $120,000
</u>
<u>Less</u><u>: Beginning inventory($100,000 x 10%) $10,000</u>
<u>Required purchase for October $110,000
</u>
<u></u>