Please show your work. I need all parts of the question answered. Thank you! 6.T
ID: 2374188 • Letter: P
Question
Please show your work. I need all parts of the question answered. Thank you!
6.The Wannabee Corp. has a desired ending inventory of 30% of the next month%u2019s estimated sales. In turn, their cost of goods sold is 60%, and their forecasted sales for the months of March, April, May, June, and July are as follows: $1,500,000, $1,760,000, $1,400,000, $1,600,000, and $1,800,000 respectively.
Purchases for the month%u2019s of February and March were $1,000,000 and $720,000, and their purchases are paid as follows: 10% during the month of the purchase,80% in the next month, and the final 10% in the next month.
Required:
Prepare budget schedules for the months of April, May, and June for purchases and also for disbursements for purchases.
Explanation / Answer
required purchases in april is 70% of 60% of 1760000 and 30% of 60% of 1400000
in april = 0.7 * 0.6 * 1760000 + 0.3 * 0.6 * 1400000 = 991200
in may = 0.7 * 0.6 * 1400000 + 0.3 * 0.6 * 1600000 = 876,000
in june = 0.7 * 0.6 * 1600000 + 0.3 * 0.6 * 1800000 = 996,000
Hence the amounts to be paid in
April is 10% of feb + 80% march + 10% april = 0.1 * 1000000 + 0.8 * 720000 + 0.1 * 991200 = 775,120
may = 0.1 * 720000 + 0.8 * 991200 + 0.1 * 876000 = 952,560
june = 0.1 * 991200 + 0.8 * 876000 + 0.1 * 996000 = 899,520