Inventory Purchases Budget for a Merchandising Firm

06/04/2011 14:37

 

Inventory Purchases Budget for a Merchandising Firm:

Learning Objectives:

  1. Define and explain an inventory budget.
  2. Prepare an inventory budget or merchandising purchase budget.

Manufacturing firms prepare production budget but merchandising firms prepare merchandising purchase budget instead. Merchandising purchase budget shows the amount of goods to be purchased from its suppliers during the period. The merchandising purchase budget has the same basic format as the production budget, as shown below:

Example:

 

Inventory Purchase Budget for Merchandising Firms

  Budgeted cost of goods sold units or dollars

xxxx

  Add desired ending merchandising inventory

xxxx

    --------
  Total needs

xxxx

  Less beginning merchandising inventory

xxxx

    ---------
  Required purchases units or dollars

xxxx

    =====