3.

1
James & Company
Purchases budget for the quarter ending 30 September
July August September Total
$ $ $ $
Cost of sales 28 000 35 000 21 000 84 000
add Ending inventory 17 500 10 500 15 750 15 750
Total requirements 45 500 45 500 36 750 99 750
less Beginning inventory 14 000 17 500 10 500 14 000
Purchases 31 500 28 000 26 250 85 750

3.2
A. Buddy
Purchases budget for year 1
Jan - Jun Yr1 July - Dec Yr 1 Total Year 1
$000 $000 $000
Sales 1 100 1 800 2 900
add Ending inventory 450 350 350
Total requirements 1 550 2 150 3 250
less Beginning inventory 275 450 275
Cost of purchases 1 275 1 700 2 975

3.3
Calculation of cost of sales
$
October ($72 000/1.2) 60 000
November ($69 000/1.2) 57 500
December ($81 000/1.2) 67 500
January ($75 000/1.2) 62 500
February ($72 000/1.2) 60 000

Calculation of inventory values
$
1 October (60% x $60 000 + 40% x $57 500) 59 000
1 November (60% x $57 500 + 40% x $67 500) 61 500
1 December (60% x $67 500 + 40% x $62 500) 65 500
1 January (60% x $62 500 + 40% x $60 000) 61 500

Orlando Groceries
Purchases budget for the quarter ending 31 December
October November December Quarter
$ $ $ $
Cost of sales 60 000 57 500 67 500 185 000
add Ending inventory 61 500 65 500 61 500 61 500
Total requirements 121 500 123 000 129 000 246 500
less Beginning inventory 59 000 61 500 65 500 59 000
Cost of purchases 62 500 61 500 63 500 187 500

3.4
(a)
Fisher Wholesalers
Sales budget for the three months ending 30 September
$
July 14 700 x $30 441 000
August 15 120 x $30 453 600
September 15 680 x $30 470 400
Total sales 1 365 000
(b)
Calculation of closing inventory (in units)
June 14 700 x 150% 22 050
July 15 120 x 150% 22 680
August 15 680 x 150% 23 520
September 16 240 x 150% 24 360

Fisher Wholesalers
Purchases budget for the three months ending 30 September
July August September Quarter
Sales 14 700 15 120 15 680 45 500
add Ending inventory 22 680 23 520 24 360 24 360
Total requirements 37 380 38 640 40 040 69 860
less Beginning inventory 22 050 22 680 23 520 22 050
Purchases (in Units) 15 330 15 960 16 520 47 810
Cost per unit x $20 x $20 x $20 x $20
Cost of purchases $306 600 $319 200 $330 400 $956 200


3.5
Afua Products
Purchases budget for the year ending 30 June
Swale Mardle Zzoha Total
$ $ $ $
Cost of sales 648 000 218 400 360 960 1 227 360
add Ending inventory 55 080 19 250 35 730 110 060
Total requirements 703 080 237 650 396 690 1 337 420
less Beginning inventory 64 800 17 500 39 700 122 000
Purchases 638 280 220 150 356 990 1 215 420

3.6
Fisher Wholesalers
Cost of goods sold budget for the three months ending 30 September
July August September Quarter
$ $ $ $
Beginning inventory 441 000 453 600 470 400 441 000
Purchases 306 600 319 200 330 400 956 200
Goods available for sale 747 600 772 800 800 800 1 397 200
less Ending inventory 453 600 470 400 487 200 487 200
Cost of goods sold 294 000 302 400 313 600 910 000

3.7
Moody Inc.
Purchases budget for the three months ending 31 December
October November December Quarter
$ $ $ $
Cost of sales 257 143 342 857 385 714 985 714
add Ending inventory 257 143 289 286 225 000 225 000
Total requirements 514 286 632 143 610 714 1 210 714
less Beginning inventory 192 857 257 143 289 286 192 857
To be purchased 321 429 375 000 321 428 1 017 857

Moody Inc.
Cost of goods sold budget for the three months ending 31 December
October November December Quarter
$ $ $ $
Beginning inventory 192 857 257 143 289 286 192 857
Purchases 321 429 375 000 321 428 1 017 857
Goods available for sale 514 286 632 143 610 714 1 210 714
less Ending inventory 257 143 289 286 225 000 225 000
Cost of goods sold 257 143 342 857 385 714 985 714


3.8
(a)
Ward Ltd
Purchases budget for the quarter ending 30 September
July August September Quarter
Sales 8 000 7 500 8 000 23 500
add Ending inventory 11 250 12 000 13 500 13 500
Total requirements 19 250 19 500 21 500 37 000
less Beginning inventory 12 000 11 250 12 000 12 000
Purchases (in units) 7 250 8 250 9 500 25 000
Cost per unit x $10 x $10 x $10 $10
Cost of purchases $72 500 $82 500 $95 000 $250 000

(b)
Ward Ltd
Cost of goods sold budget for the quarter ending 30 September
July August Septembe
r
Quarter
$ $ $ $
Beginning inventory 120 000 112 500 120 000 120 000
Purchases 72 500 82 500 95 000 250 000
Goods available for sale 192 500 195 000 215 000 370 000
less Ending inventory 112 500 120 000 135 000 135 000
Cost of goods sold 80 000 75 000 80 000 235 000

3.9
Expense July August September
Salespersons
wages
$288 000/12
= $24 000

$24 000

$24 000
Sales
commissions
5% x $441 000
= $22 050
5% x $453 600
= $22 680
5% x $470 400
= $23 520
Labour on-costs ($24 000 +
$22 050) x 16%
= $7 368
($24 000 +
$22 680) x 16%
= $7 469
($24 000 +
$23 520) x 16%
= $7 603
Depreciation on
Warehouse
Fixtures &
Equipment

15% x $130 000/12
= $1 625


$1 625


$1 625

Fisher Wholesalers
Marketing expenses budget for the three months ending 30 September
July August September Quarter
$ $ $ $
Salespersons wages 24 000 24 000 24 000 72 000
Sales commissions 22 050 22 680 23 520 68 250
Labour on-costs 7 368 7 469 7 603 22 440
Depreciation - warehouse
equipment

1 625

1 625

1 625

4 875
Total marketing expenses 55 043 55 774 56 748 167 565


3.10
Workings
Administrative wages and salaries $432 000/12 = $36 000 per month
Audit fees $12 000/12 = $1 000 per month
Labour on-costs 16% x $36 000 = $5 760 per month
Rent $86 400/12 = $7 200 per month
Telephone and stationery $18 000/12 = $1 500 per month
Depreciation - motor vehicles 20% x $150 000/12 = $2 500 per month
Depreciation - office equipment 15% x $100 000/12 = $1 250 per month

Fisher Wholesalers
Administration expenses budget for the three months ending 30 September
July August September Quarter
$ $ $ $
Administrative salaries & wages 36 000 36 000 36 000 108 000
Audit fees 1 000 1 000 1 000 3 000
Labour on-costs 5 760 5 760 5 760 17 280
Rent 7 200 7 200 7 200 21 600
Telephone & stationery 1 500 1 500 1 500 4 500
Depreciation - motor vehicles 2 500 2 500 2 500 7 500
Depreciation - office equipment 1 250 1 250 1 250 3 750
Total administration expenses 55 210 55 210 55 210 165 630

3.11
Workings
Credit dept staff wages $78 000/12 = $6 500 per month
Labour on-costs 16% x $6 500 = $1 040 per month
Bad debts - July 1% x $441 000 = $4 410
Bad debts - August 1% x $453 600 = $4 536
Bad debts - September 1% x $470 400 = $4 704
Bank charges $3 840/12 = $320 per month

Fisher Wholesalers
Financial expenses budget for the three months ending 30 September
July August September Quarter
$ $ $ $
Credit dept staff wages 6 500 6 500 6 500 19 500
Labour on-costs 1 040 1 040 1 040 3 120
Bad debts 4 410 4 536 4 704 13 650
Bank Charges etc 320 320 320 960
Total financial expenses 12 270 12 396 12 564 37 230