Requiredt Prepare a budget for the number of medallions M the first three months

Question

Requiredt Prepare a budget for the number of medallions M the first three months of next year for each of the followin Chapter 3 D s Merita needs to ndent sitbuations icy is to have inventory on hand at the ual to 15% of the following month's sales requiremen, each (I) The company's pol (2) The company's policy is to keep each month's ending inv entory to a mini mum without letting it fall below 5,000 medallions. Ass December I inventory has 5,000 medallions and that the supplier is willing to sell a maximum of 125,000 medallionsompays pany per month. um medallions tothecu 3.28 Top Dog Pet Store sells dog food in 20-pound bags for $10 per bag, which buys from its supplier for $7 per bag. Top Dog estimates that its sales of bags of second quarter of the year will be as follows: April May June Bags 1,200 1,400 1,500 Top Dog's policy is to have bags of dog food on hand at the end of each month equal to bags of dog food 10% of the next month's budgeted sales (bags). It expects to have 120 d on hand at the end of March and expects to sell 1,650 bags in July. Top Dog expects its cost of purchases to be $7,770 in March; it pays for its purchases in the following month Required: (I) Prepare a purchases budget for bags of dog food for the second quarter of this year for Top Dog. (2) How many bags of dog food did Top Dog expect to sell in March 3-29 Blanchar Business Machines estimates its monthly selling expenses as follows

Explanation / Answer

Part 1 - Purchase Budget of Top Dog Pet Store

Purchase Budget

Top Dog Pet Store

For the second quarter ending June

140

(1400*10%)

150

(1500*10%)

165

(1650*10%)

Part 2 - Expected sell of bags in march

Let sale of bags in march = 'x'

Opening Inventory of March (Closing Inventory of february) = 10% of x = 0.1x

solve the equation

x = 1110 - 120 + 0.1x

x = 990 + 0.1x

0.9x = 990

x = 1100 bags (Expected sale of bags in march)

Particulars April May June Quarter Total Budgeted Sales (in bags) 1200 1400 1500 4100 Add : Ending Inventory (10% of next Month sale)

140

(1400*10%)

150

(1500*10%)

165

(1650*10%)

455 Total Bags Required 1340 1550 1665 4555 Less : Beginning Inventory 120 (Given) 140 (Ending of April) 150 (Ending of May) 410 Budgeted purchases of bags 1220 1410 1515 4145 Purchase price per bag $7 $7 $7 $7 Cost of purchases $8540 $9870 $10605 $29015 Payments of purchases $7770 (given) $8540 $9870 $26150

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