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12 May, 12:42

A firm has the following forecast information for sales of Product X: April 15,000 units May 17,000 units June 19,000 units July 18,000 units Product X sells for $3 per unit. Half of the firm's sales are for cash and the other half is on account. Credit sales are collected in the following pattern: 60% in the month of sale, 30% in the month following sale, and 5% in the second month following sale (the remainder are uncollectible). If the firm targets its ending inventories to be 25% of the following month's sales, what are the budgeted purchases (in units) for June

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Answers (2)
  1. 12 May, 14:34
    0
    18,750 units

    Explanation:

    the firm estimates in monthly ending inventories at 25% of next month's sales:

    ending inventory May = 19,000 x 25% = 4,750 units

    units sold during June = 19,000 units

    ending inventory June = 18,000 x 25% = 4,500 units

    total purchases for June = 19,000 + 4,500 - 4,750 = 18,750 units

    Sales forecast:

    month units sold price p / unit total sales cash credit

    April 15,000 $3 $45,000 $22,500 $13,500

    May 17,000 $3 $51,000 $25,500 $22,050

    June 19,000 $3 $57,000 $28,500 $25,875

    July 18,000 $3 $54,000 $27,000 $26,025
  2. 12 May, 15:21
    0
    18,750 units

    Explanation:

    A firm has the following forecast information for sales of Product X:

    April 15,000 units

    May 17,000 units

    June 19,000 units

    July 18,000 units Product X sells for $3 per unit.

    Half of the firm's sales are for cash and the other half is on account.

    Credit sales are collected in the following pattern: 60% in the month of sale, 30% in the month following sale, and 5% in the second month following sale (the remainder are uncollectible).

    If the firm targets its ending inventories to be 25% of the following month's sales, what are the budgeted purchases (in units) for June.

    Purchases Budget = Required production for sales - opening inventory of raw materials + closing inventory of raw materials = Raw materials required

    June's Production Budget

    Required production for sales = ... 19,000 units

    less: Beginning inventory (25% of June's sales) = ... 4,750 units

    Add: Required Ending Inventory (25% of July's sales) = ... 4,500 units

    Raw materials required for purchase in June = ... 18,750 units
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Home » Business » A firm has the following forecast information for sales of Product X: April 15,000 units May 17,000 units June 19,000 units July 18,000 units Product X sells for $3 per unit. Half of the firm's sales are for cash and the other half is on account.
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