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Executive officers of Solomon Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different
Executive officers of Solomon Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources.
Source of Estimate | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
---|---|---|---|---|
Sales manager | $ 372,000 | $ 305,000 | $ 278,000 | $ 489,000 |
Marketing consultant | 521,000 | 457,000 | 410,000 | 657,000 |
Solomons past experience indicates that cost of goods sold is about 55 percent of sales revenue. The company tries to maintain 20 percent of the next quarters expected cost of goods sold as the current quarters ending inventory. This years ending inventory is $29,000. Next years ending inventory is budgeted to be $30,000.
Required
- Prepare an inventory purchases budget using the sales managers estimate.
- Prepare an inventory purchases budget using the marketing consultants estimate.
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