A sales budget is given below for one of the products manufactured by Trumpet, Ltd.MonthSales Budget in UnitsJuly28,000August30,000September34,000October36,000November29,000December26,000The inventory of finished goods at the end of each month must be equal to 20% of the next month's sales. On June 30, the finished goods inventory totaled 6,800 units.Each unit of product requires ten ounces of a special chemical known as AQ-12. Sometimes the chemical is in short supply; for this reason, the company has a policy of maintaining an inventory at the end of each month equal to 75% of the next month's production needs. This requirement was met on July 1 of the current yearRequired:Prepare a budget showing the quantity of AQ-12 to be purchased for October.
What will be an ideal response?
Ending finished goods inventory, October: 29,000 × 20% = 5,800; November: 26,000 × 20% = 5,200.
Beginning finished goods inventory, October: 36,000 × 20% = 7,200.
Ending raw materials inventory, October: 284,000 × 75% = 213,000.
Beginning raw materials inventory, October: 346,000 × 75% = 259,500.
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