E6-38B. (Learning Objective 4: Budgeting inventory purchases) Toyland prepares budgets to help manage the company. Toyland is budgeting for the fiscal year ended January 31, 20X6.

During the preceding year ended January 31, 20X5, sales totaled €9,500 million and cost of goods sold was €6,400 million. At January 31, 20X5, inventory stood at €1,900 million. During the upcoming 20X6 year, suppose Toyland expects cost of goods sold to increase by 10%. The company budgets next year’s inventory at €2,200 million.

Requirement 1. One of the most important decisions a manager makes is how much inventory to buy. How much inventory should Toyland purchase during the upcoming year to reach its budgeted figures?