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Hello,Brooklyn furniture, a retail store, has an average gross profit ratio of 47%.  The sales forecast for the next 4 months follows:July$252,000August217,000September302,000October420,000Management's inventory policy is to have ending inventory equal to 350% of the cost of sales for the subsequent month, although it is estimated that the cost of inventory at June 30 will be $401,000.Calculate the purchases budget, in dollars for the months of July and August. PurchasesJuly???August???Thanks...

Question

Hello,

Brooklyn furniture, a retail store, has an average gross profit ratio of 47%.  The sales forecast for the next 4 months follows:

July $252,000
August 217,000
September 302,000
October 420,000

Management's inventory policy is to have ending inventory equal to 350% of the cost of sales for the subsequent month, although it is estimated that the cost of inventory at June 30 will be $401,000.

Calculate the purchases budget, in dollars for the months of July and August.

  Purchases
July

???

August ???

Thanks...

check_circleAnswer
Step 1

Calculate cost of sales ratio:

Let assume, sales ratio is 100%, and gross profit ratio directly given as 47%.

 

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Step 2

Calculate purchases budget for the month...

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