Question

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:

Answer 1

Answer:

Merchandise purchases budget.

Explanation:

The Merchandise purchases budget is a plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period.

It is prepared by a retail company to make sure it has sufficient inventory on hand. It uses the budgeted sales figures from the Sales Budget to decide the quantity of inventory to be bought at each period

Answer 2

The correct statement is that a plan that reports the units or costs of merchandise to be purchased by merchandising company is called a

It denotes and helps in understanding the formulation of inventories and free cash flows in the hands of the company as on the date of preparation of budgets by a merchandising company.

• The requirement of the merchandising company to purchases can be estimated by addition of cost of goods sold and the desired ending cost of inventory which is to be subtracted with opening stock.

• The formula to calculate the merchandise purchases budget by a merchandising company can be stated as below,

• $\rm Merchandise\ Purchases\ Budget= \ Costs\ of\ Goods\ sold\ + Desired\ Inventory\ - Stock$

• The formula stated above is effective in analyzing how much units are to be produced and the costs that can be reduced or born, if any by such merchandising company.

Hence, the correct statement is that a report which suggests merchandise to be purchased by a company for a given accounting period is known as merchandise purchase budgeting report.

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