Problem 20-5AA Merchandising: Preparation and analysis of purchases budgets LO P4 Keggler's Supply is a merchandiser of three different products. The company's February 28 inwentories are footwear, 19,000 units; sports equipment, 80,500 units, and apparel 48,500 units. Management believes each of these inventories is too high. As a result, a new policy dictates that ending inventory in any month should equal 32% of the expected unit sales for the following month. Expected sales in units for March April May, and June follow. Budgeted sales in Units March April Nay Footwear 15,500 25,500 32,500 35,300 Sports equipment 68.500 89.000 95.000 90.500 Apparel 40,000 38,000 34,000 24,000 June Required: 1. Prepare a merchandise purchases budget (in units) for each product for each of the months of March April, and May. April 32.500 KEBOLER'S SUPPLY Merchandise Purchases Budget Far March April, and May March FOOTWEAR Budgeted sale for next month 25,500 Ratio of ending inventory to future sales 32% Budgeted ending inventory 8,160 Budgeted units sales for month 15,500 Required units of available merchandise 23.660 Actual (or estimated) beginning Inventory 19,000 Budgeted purchases 4,660 SPORTS EQUIPMENT Budgeted sales for next month 89,000 Ratio of ending inventory to future sales 32% Budgeted ending inventory 28.480 35,500 32% 11,360 10,400 25,500 35.900 8,160 27,740 32,500 43.860 10,400 33.460) 95,000 32% 30.400 90,500 325 28.960 80.500 7.980 Required units of available merchandise Actual (or estimated) beginning inventory Budgeted purchases APPAREL Budgeted sales for next month Ratio of ending inventory to future sales Budgeted ending inventory Budgeted units sales for month Required units of available merchandise Actual (or estimated) beginning inventory Budgeted purchases 38.000 32% 34,000 32% 10.880 12.160 40,000 52,160 48,500 24,000 32% 7.580 34,000 41 680 38,000 48.880 12.160 10.880