In: Accounting
Willow Designs have provided you with the following relevant information:
Desired ending inventory 2019 $= 45,673
Expected sales 2019 $= 382,038
Opening inventory 2019 $= 41,498
Cost of goods sold is 45% of budgeted sales
On the basis of the information provided, calculate the total budgeted purchases for 2019 (rounded to the nearest dollar)
Answer: $176,092
Working:
Cost of goods sold = opening inventory + Purchases - Ending inventory
$171,917=$41,498+Purchases-$45,673
Purchases=$171,917+$45,673-$41,498
Budgeted Purchases for 2019 = $176,092
Note:
Cost of goods sold = 45% of budgeted sales
i.e.=45%*$382,038
=$171,917