Inventory Purchases Budget for a Merchandising Firm

Inventory Purchases Budget for a Merchandising Firm:

Learning Objectives:

  1. Define and explain an inventory budget.
  2. Prepare an inventory budget or merchandising purchase budget.

Manufacturing firms prepare production budget but merchandising firms prepare merchandising purchase budget instead. Merchandising purchase budget shows the amount of goods to be purchased from its suppliers during the period. The merchandising purchase budget has the same basic format as the production budget, as shown below:


Inventory Purchase Budget for Merchandising Firms

Budgeted cost of goods sold units or dollars


Add desired ending merchandising inventory


Total needs


Less beginning merchandising inventory


Required purchases units or dollars




You may also be interested in other articles from “Budgeting and planning” chapter:

  1. Profit Planning
  2. Participative or Self Imposed budgeting
  3. Human Factors in Budgeting
  4. Zero Based Budgeting (ZBB)
  5. Budget Committee
  6. Master Budget
  7. Sales Budget
  8. Production Budget
  9. Inventory Purchases Budget for a Merchandising Firm
  10. Material Budgeting | Direct Materials Budget
  11. Labor Budget
  12. Manufacturing Overhead Budget
  13. Ending Finished Goods Inventory Budget
  14. Selling and Administrative Expense Budget
  15. Cash Budget
  16. Budgeted Income Statement
  17. Budgeted Balance Sheet
  18. International Aspects of Budgeting

Other Related Accounting Articles:

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