Perry Company Has Provided the Following Information In Addition,the Gross Profit Rate Is 40% and the Desired

question 167

Essay

Perry Company has provided the following information:
$$\begin{array} { l c } \text { Month } & \text { Budgeted Sales } \\\text { March } & \$ 200,000 \\\text { April } & 212,000 \\\text { May } & 204,000 \\\text { June } & 218,000 \\\text { July } & 210,000\end{array}$$ In addition,the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales.
Required:
Prepare a purchases budget for April through June.

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Definitions:

Perpetual Inventory System

An inventory management system where updates to inventory records are made in real-time following each sale or purchase transaction.

FIFO

An inventory valuation method that assumes the first items acquired are the first ones sold, standing for First-In, First-Out.

Last-in, First-out

An inventory valuation method where the most recently produced or purchased items are the first to be expensed, often used to manage costs and taxes.

Last-in, First-out Method

An inventory valuation method where the goods purchased last are considered sold first for cost of goods sold calculation.