Problem I g forecasts of monthly sales: Sales (in Units) uly August September Oc

Question

Problem I g forecasts of monthly sales: Sales (in Units) uly August September October 4,500 5,300 4,000 3,700 Pantheon equal 25% of the next month's sales. The budgeted cost per unit is$30. (1) How many units should be in July's beginning inventory? (2) What amount should be budgeted for the cost of merchandise purchases in Jaly? has decided that the number of units in its inventory at the end of each month should (3) How many units should be purchased in September? Pro blem IIT $88,000, and S72,000, respectively. Seventy percent of sales are on credit. The collects 60% of its credit sales in the month following sale, 35% in the second month . following sale, and 5% is not collected. Wha related to all current and past sales? The Lamb Company budgeted sales for January, February, and March of $96,000, company are Lamb's expected cash receipts for March

Explanation / Answer

PROBLEM 2

(1) July's beginning inventory = Sales in units in july * 25% = 4,500 * 25% = 1,125

(2) Purchases in units in July = July sales in units + 25% of August sales in units - 25% of july sales in units

= 4,500 + (5,300*25%) - (4,500*25%)

= 4,500 + 1,325 - 1,125

= 4,700

Amount budgeted for the cost of merchandise purchases in July = Purchases in july * cost

= 4,700 * 30

= 141,000

3) Purchases in units in September = September sales in units + 25% of October sales in units - 25% of September sales in units

= 4,000 + (3,700*25%) - (4,000*25%)

= 4,000 + 925 - 1,000

= 3,925

PROBLEM 2

Expected cash receipts for March = 60% of february credit sales + 35% of january credit sales

= (88,000*70%*60%) + (96,000*70%*35%)

= 36,960 + 23,520

= 60,480

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