White Products wishes to purchase goods in one month for sale in the next. On Ma
ID: 2455954 • Letter: W
Question
White Products wishes to purchase goods in one month for sale in the next. On March 31, the company has 24,000 portable music players in stock, although sales for the next month (April) are estimated to total 26,100 players. Total sales of players are expected to be 21,400 in May and 22,000 in June.
Portable music players are purchased at a wholesale price of $100. The supplier has a financing arrangement by which White Products pays 60 percent of the purchase price in the month when the players are delivered and 40 percent in the following month. White purchased 31,000 players in March.
Estimate the cash required to make purchases in April and May.
White Products wishes to purchase goods in one month for sale in the next. On March 31, the company has 24,000 portable music players in stock, although sales for the next month (April) are estimated to total 26,100 players. Total sales of players are expected to be 21,400 in May and 22,000 in June.
Portable music players are purchased at a wholesale price of $100. The supplier has a financing arrangement by which White Products pays 60 percent of the purchase price in the month when the players are delivered and 40 percent in the following month. White purchased 31,000 players in March.
Explanation / Answer
a) As White Products wishes to purchase goods in one month for sale in the next:
Estimate Purchases in April is 21,400 and for May is 22,000
b) cash required to make purchases in April and May.
April cash required = $ 2,244,000
May cash required = $ 2,176,000
Purchase price Amount to be paid month of Cash required Cash required month March stock 24,000 100 2,400,000 1,440,000 March 960,000 April Estimated sale in April 21,400 2,140,000 1,284,000 April 2,244,000 April 856,000 May Estimated sale in May 22,000 2,200,000 1,320,000 May 2,176,000 MayRelated Questions
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