Kegler's Supply
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Preparation and analysis of merchandise purchases budgets L.O. C3, A1
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Problem 7-1A: Preparation and analysis of merchandise purchases budgets L.O. C3, A1
Kegler's Supply is a merchandiser of three different products. The company's February 28 inventories are
footwear, 20,000 units; sports equipment, 80,000 units; and apparel, 50,000 units. Management believes that
excessive inventories have accumulated for all three products. As a result, a new policy dictates that ending
inventory in any month should equal 30% of the expected unit sales for the following month. Expected sales in
units for March, April, May, and June follow.
Budgeted Sales in Units
March April May June
Footwear 15,000 25,000 32,000 35,000
Sports equipment 70,000 90,000 95,000 90,000
Apparel 40,000 38,000 37,000 25,000
Required:
Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and
May. (Omit the "%" sign, which is provided for you. Amounts in parentheses does not require a minus
sign.)
KEGLER'S SUPPLY
Merchandise Purchases Budgets
For March, April, and May
March April May
Footwear
Budgeted sales for next month
Ratio of ending inventory to future sales % % %
Required units of available merchandise
( ) ( ) ( )
Sports equipment
Budgeted sales for next month
Ratio of ending inventory to future sales % % %
Required units of available merchandise
( ) ( ) ( )
Apparel
Budgeted sales for next month
Ratio of ending inventory to future sales % % %
Required units of available merchandise
( ) ( ) ( )
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Solution Summary
This solution is comprised of a detailed explanation to prepare three merchandise purchases budgets.
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Problem 7-1A: Preparation and analysis of merchandise purchases budgets L.O. C3, A1
Kegler's Supply is a merchandiser of three different products. The company's February 28 inventories are footwear, 20,000 units; sports equipment, 80,000 units; and apparel, 50,000 units. Management believes that excessive inventories have accumulated for all three products. As a result, a new policy dictates that ending inventory in any month should equal 30% of the expected unit sales for the following month. Expected sales in units for March, April, May, and June follow.
Budgeted Sales in Units
March April ...
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