Conchita Company has the following information: Month Budgeted Sales March P 50,000 April 53,000 May 51,000 June 54,500 July 52,500 In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month’s cost of sales. Required: Prepare a purchases budget for April and May.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Conchita Company has the following information:
Month Budgeted Sales
March P 50,000
April 53,000
May 51,000
June 54,500
July 52,500
In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month’s cost of sales.
Required: Prepare a purchases budget for April and May.
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