Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and May.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Keggler’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 each of these inventories is too high. 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 |
1. Prepare a merchandise purchases budget (in units) for each product for each of the months of March, April, and May.
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