Question :

Walker Company prepares monthly budgtes. The existing budget plans for a SEP ending inventory of 30,000 units. Company policy is to end each month with merchandise inventory equal to a given percent of budgeted sales for the subsequent month. Budgeted sales and merchandise purchases for the three months recent months are as follows:

July- Sales (units) 180,000, Purchases (units) 200,250

Aug-Sales 315,000, Purchases 308,250

Sep- Sales 270,000, Purchases 259,500

The subsequent actions are required:

Prepare a merchandise purchases budget for the months of JUL, AUG, and SEP.

Evaluate the ratio of ending inventory to the next month's sales for each budget prepared in part 1.

Compute how many units are budgeted for October.