lackawanna products\' management wishes to purchase goods in one month for sale

Question

lackawanna products' management wishes to purchase goods in one month for sale in the next on Jan 31 the company haas 8,000 digital music playrs in stock although sales fpr the next month Feb are estimated to total 8,600 players sales for Mar are expected to equal 7,000 players and Apr sales expected to total 7,400 players

Tape players are purchased at a wholesale price of $ 290 the supplier has a financing arrangement by which Lackawanna pays 60 percent of purchase price in the month when the players are delivered and 40 percent in the folowing month the company purchased 10,000 players in Jan

please answer all

A estimate the purchase unit for Feb and Mar

B estimate cash required in Feb, Mar to pay for the company's first quarter purchases

Explanation / Answer

A)

units to be purchase in Feb = 8600 + 7000 - 8000 = 7600

units in march = 7400 ( the units to be sold in april ).

B)

cash in feb is 40% of jan + 60% of feb

= 0.4 * 10000 * 290 + 0.6 * 7600 * 290 = $2,482,400

cash in march = 0.4 * 7600 * 290 + 0.6 * 7400 * 290 = $2,169,200

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