The formula for determining budgeted merchandise purchases is budgeted
A) production + desired ending inventory - beginning inventory.
B) sales + beginning inventory - desired ending inventory.
C) cost of goods sold + desired ending inventory - beginning inventory.
D) cost of goods sold + beginning inventory - desired ending inventory.

Question

Quizplus · Accepted Answer

The formula for determining budgeted merchandise purchases is cost of goods sold + desired ending inventory - beginning inventory. This is because the cost of goods sold represents the cost of the merchandise that was sold during the budget period, and to determine the amount of additional merchandise that needs to be purchased, you need to add the desired ending inventory (the amount of inventory you want to have on hand at the end of the budget period) and subtract the beginning inventory (the amount of inventory you had on hand at the beginning of the budget period). Therefore, the formula is C.

The Formula for Determining Budgeted Merchandise Purchases Is Budgeted