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    Purchase Budget

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    Ellerbrock's, a retail store, has an average gross profit of 21%. The sales forecast for the next four months follows:

    September $78,000
    October $71,000
    November $85,000
    December $90,000

    Management's inventory policy is to have ending inventory equal to 2.4 times the cost of sales for the subsequent month, although it is estimated that the cost of inventory at August 31st will be $175,000.

    Calculate the purchase budget, in dollars, for the months of September, October, and November.

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    Solution Preview

    Purchase Budget
    Month September October November December
    Sales 78,000 71,000 ...

    Solution Summary

    The solution explains how to prepare a purchase budget