Acc -3rd Ed. Ch-14 Problem

Acc -3rd Ed. Ch-14 Problem

Question
	


Ex. 7-11A 


Executive Officers of Dominick Company are wrestling with their budget for the next year. The following are two different sales estimates provide by two difference sources.















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Source of Estimate



First Quarter



Second Quarter






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Third Quarter



Fourth Quarter





Sales Manager



$380,000



$310,000



$280,000



$480,000





Marketing Consultant



520,000



460,000



410,000



650,000




Dominick’s past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 10 percent of the next quarters expected cost of goods sold as the current quarter’s ending inventory. This year’s ending inventory is $29,000. Next year’s ending inventory is budgeted to be $30,000.


Required:


a. Prepare an inventory purchases budget using the sales manger’s estimate.


b. B. Prepare an inventory purchases budget using the marketing consultant’s estimate