Lakeside Components wishes to purchase parts in one month for sale in the next. On June...
Lakeside Components wishes to purchase parts in one month for
sale in the next. On June 1, the company has 10,000 parts in stock,
although sales for June are estimated to total 11,200 parts. Total
sales of parts are expected to be 12,200 in July and 10,400 in
August.
Parts are purchased at a wholesale price of $10. The supplier has a
financing arrangement by which Lakeside Components pays 60 percent
of the purchase price in the month when the parts are delivered and
40 percent in the following month. Lakeside purchased 15,000 parts
in May.
Required:
a. Estimate purchases (in units) for June and July.
b. Estimate the cash required to make purchases in
June and July.
Homework Answers
a.
Purchases = Sales - ending units - beginning units
June = 11,200 + 12,200 - 10,000 =13,400
July = 12,200 + 10,400 - 12,200 = 10,400
b.
June payment = (15,000 X $10 X 40%) + (13,400 X $10 X 60%) = $140,400
July payment = (13,400 X $10 X 40%) + (10,400 X $10 X 60%) = $116,000
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