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    Preparing a Purchasing Budget

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    The young company produces vegetable candy bars called Veggie bars. Each six ounce Veggie bar contains five ounces of Brussels sprouts, which Young purchases for $0.05 an ounce, budgeted production of vegetable candy bars for the first four months of 2001 is as follows:

    January: 100,000
    February: 120,000
    March: 110,000
    April: 100,000

    Young has an inventory policy that ending inventory of Brussels sprouts should be 10% of the following month's requirements.

    Prepare a purchasing budget for the first quarter of 2001 by month and for the quarter in total. Show the amount of materials required in unit and in dollar amounts.

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    Solution Summary

    This solution explains in a step by step manner how to formulate a purchasing budget with the help of a practical case. The solution is enclosed within an attached Excel document.