The Drew Company Has the Following Information In Addition, the Gross Profit Rate Is 40% and the }

question 27

Essay

The Drew Company has the following information: $\begin{array}{lc}\text { Month } & \text { Budgeted Sales } \\\text { March } & \$ 150,000 \\\text { April } & 153,000 \\\text { May } & 151,000 \\\text { June } & 254,500 \\\text { Julv } & 252,500\end{array}$ In addition, the gross profit rate is 40% and the desired ending inventory level is 20% of next month's sales.
Required: Prepare a purchases budget for April through June.

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Definitions:

Peak Period

The time frame during which demand for a service or product is at its highest.

Spoilage

The process by which products deteriorate in quality or become unfit for consumption or use over a period.

Reserved Capacity

A business strategy where a portion of production capability or service availability is set aside for a particular customer or project.

Revenue Management

Is the practice of strategically controlling inventory and pricing to maximize revenue, commonly used in industries like hotels, airlines, and hospitality.