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Exercise 14-10 Preparing inventory purchases budgets with different assumptions Executive officers of Weston Company are wrestling with their budget for the next year. The following
Exercise 14-10 Preparing inventory purchases budgets with different assumptions Executive officers of Weston Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources. Source of Estimate Sales manager Marketing consultant 526 Chapter 14 First Quarter $450,000 600,000 Second Quarter $360,000 480,000 Third Quarter $320,000 420,000 Fourth Quarter $540,000 700,000 LO 14-3 Weston's past experience indicates that cost of goods sold is about 60 percent of sales reve- nue. The company tries to maintain 10ercent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $30,000. Next year's ending inventory is budgeted to be $36,000. Required a. Prepare an inventory purchases budget using the sales manager's estimate. b. Prepare an inventory purchases budget using the marketing consultant's estimate.
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