Midland Company buys tiles and prints different designs on them for souvenir and
ID: 2392835 • Letter: M
Question
Midland Company buys tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock equal to the tiles needed for three months' sales. The tiles cost $0.75 each and must be paid for in cash. The company has 29,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months January February March April May June 12,300 18,100 12,800 15,100 9100 7,500 Required a. & b. Estimate purchases (in units) and cash required to make purchases in January February, and March MIDLAND C Merchandise Purchases Budget For the Period Ended March 31 (in units) February March Units to be purchased Estimated costExplanation / Answer
Calculation of units to be purchased:
January
February
March
Opening Stock (A)
29000
46000
37000
Sales in current month (B)
12300
18100
12800
Closing stock (3 months sale) (C)
18100+12800+15100 = 46000
12800+15100+9100 = 37000
15100+9100+7500 = 31700
Units to be purchased (B+C-A)
46000 + 12300 - 29000 = 29300
18100+37000 – 46000 = 9100
12800+31700 – 37000 = 7500
Calculation of estimated cost:
MIDLAND COMPANY
Merchandise Purchases Budget
For the period ended March 31
(in units)
January
February
March
Units to be purchased
29300
9100
7500
Estimated cost
29300*0.75 = 21975
9100*0.75 = 6825
7500*0.75 = 5625
January
February
March
Opening Stock (A)
29000
46000
37000
Sales in current month (B)
12300
18100
12800
Closing stock (3 months sale) (C)
18100+12800+15100 = 46000
12800+15100+9100 = 37000
15100+9100+7500 = 31700
Units to be purchased (B+C-A)
46000 + 12300 - 29000 = 29300
18100+37000 – 46000 = 9100
12800+31700 – 37000 = 7500