Budgeted cost of merchandise purchases

Budgeted Cost of Sales = Sales x (1 – Gross Margin %)

= 900,000 x (1-0.45)

= 900,000 x .55

= $ 495,000

Budgeted Purchases = Budgeted Cost Of Sales + (Net Change In Inventory)
Budgeted Purchases = 495,000 + (50,000 – 55,000)

= 495,000 -5,000

= 490,000.

budgeted cost of merchandise purchases =490,000

explaination

budgeted cost of purchases is an operational component of master budget. It is prepared to calculate the manufacturing costs that are expected to be incurred on budgeted finished goods.we Calculte Cost of goods sold and add purchase and deduct sales from it what we get is budgeted cost of merchandise purchases