Olivia, the purchasing head of a small retail store dealing in cases to fit all types of specs, is preparing the budget for August 2024. July records show an ending inventory balance of 670 units, and Joe, the sales head of the store, gives her a sales estimate of 8,000 units for August. Olivia changes the minimum inventory requirement and makes a policy to maintain an ending inventory of 470 units from August onwards. If the budgeted purchase price per unit is $5.60 and the store successfully adds a purchase discount of 15% for payment within the discounted period, then the budgeted amount of net purchase for August 2024 will be
A) $37,128.
B) $36,780.
C) $37,654.
D) $39,528.

Question

Quizplus · Accepted Answer

Budgeted Net Purchases = Total Budgeted Purchases F1F1F1S1?F1F1F10 Purchase Discounts;
Total Budgeted Purchases = (Budgeted Sales Volume + Target Ending Inventory F1F1F1S1?F1F1F10 Target Beginning Inventory) × Purchase Price = (8,000 + 470 F1F1F1S1?F1F1F10 670) × $5.60 = $43,680
Purchase Discounts = Total Budgeted Purchase × Percentage of Purchase Discount
= $43,680 × 15% = $6,552
Budgeted Net Purchases = $43,680 F1F1F1S1?F1F1F10 $6,552 = $37,128.

Olivia, the Purchasing Head of a Small Retail Store Dealing