Question

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ROBLEM 4 (10 pints) The sales budget of Hickory Company for the third quarter of 2018 is as follows: July August September Sales $96,000 $72,000 $108,000 Sales are 20% cash, 80% credit. Cost of goods sold is 70% of total sales. Desired ending inventory for each month is equal to 25% of cost of goods sold for the followil Collections on credit sales are as follows: 50% in the month of sale 30% in the month following sale 15% in the second month following sale 5% uncollectible July 1 inventory is $16,000. Expected sales for October are $84,000. Payments for inventory are 70% in the month following purchase and 30% two months follow Prepare the purchases budget for July, August, and September

Answer 1

Solution:

Material Purchase Budget - Beech Corporation
Particulars	July	August	September	Total
Budgeted Sales	$96,000.00	$72,000.00	$108,000.00	$276,000.00
Cost of Sales (70% of Sales)	$67,200.00	$50,400.00	$75,600.00	$193,200.00
Add: Desired ending inventory (25% of COGS of next month)	$12,600.00	$18,900.00	$14,700.00	$14,700.00
Cost of goods available for sale	$79,800.00	$69,300.00	$90,300.00	$207,900.00
Less: Opening Inventory	$16,000.00	$12,600.00	$18,900.00	$16,000.00
Budgeted purchases (in dollars)	$63,800.00	$56,700.00	$71,400.00	$191,900.00