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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Required A Required B
Prepare an inventory purchases budget using the marketing consultant's estimate.
Note: Round your final answers to nearest whole dollar amount.
Sales
Total inventory needed
Required purchases
$
A
First Quarter
527,000 $
0
Second Quarter
0
Required A
470,000 $
0
0
$
Third Quarter
Required B >
411,000 $
0
Fourth Quarter
0
646,000
0
0

Transcribed Image Text:Executive officers of Fanning Company are wrestling with their budget for the next year. The following are two different
sales estimates provided by two different sources.
Source of Estimate
Sales manager
Marketing consultant
Fanning's past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to
maintain 20 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This
year's ending inventory is $25,000. Next year's ending inventory is budgeted to be $26,000.
Required
a. Prepare an inventory purchases budget using the sales manager's estimate.
b. Prepare an inventory purchases budget using the marketing consultant's estimate.
Complete this question by entering y Assessment Tool iFrame tabs below.
Show Transcribed Text
First Quarter Second Quarter
$ 383,000
$ 304,000
527,000
470,000
Sales
Required A Required B
Required A
Prepare y purchases budget using the sales manager's estimate.
Note: Round your final answers to nearest whole dollar amount.
Total inventory needed
Required purchases
$
$
First Quarter
383,000 $
0
0
Third Quarter Fourth Quarter
$ 273,000
$ 471,000
411,000
646,000
Required A
Second Quarter
$
304,000 $
0
Third Quarter
0 $
Required B
>
273,000
0
0
Fourth Quarter
471,000
$
$
0
0
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