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Unformatted text preview: $320,000 in August. Cost of goods sold is expected to be 70% of sales—that is, $210,000 in July (.70 × $300,000) and $224,000 in August (.70 × $320,000). The company's desired ending inventory is 30% of the following month's cost of goods sold. Required merchandise purchases for July are $214,200, computed as follows. Illustration 20-20 Merchandise purchases budget When a merchandiser is departmentalized, it prepares separate budgets for each department. For example, a grocery store prepares sales budgets and purchases budgets for each of its major departments, such as meats, dairy, and produce. The store then combines these budgets into a master budget for the store. When a retailer has branch stores, it prepares separate master budgets for each store. Then it incorporates these budgets into master budgets for the company as a whole....
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- Fall '11
- Merchandiser, merchandise purchases