All sales are on credit. Recent experience shows that 28% of credit sales is col
ID: 2448027 • Letter: A
Question
All sales are on credit. Recent experience shows that 28% of credit sales is collected in the month of the sale, 42% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible. The product’s purchase price is $110 per unit. All purchases are payable within 11 days. Thus, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has a policy to maintain an ending monthly inventory of 20% of the next month’s unit sales plus a safety stock of 175 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,572,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month-end is $120,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $120,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 13% interest rate. On May 31, the loan balance is $37,000, and the company’s cash balance is $120,000.(Round final answers to the nearest whole dollar.)
Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.
the table to fill in looks as follows
Aztec company
merchandise purchase budgets
for may june july
May June july
bugdeted ending inventory units
budgeted unit sales for month
required unit of available merchandise
budgeted beinging inventory units
budgeted purchases units
budgeted cost per unit
budgeted cost of merchandise purchases
Aztec Company sells its product for $160 per unit. Its actual and projected sales follow.Explanation / Answer
May June July Budgeted Ending Inventory Units 1475 1375 935 Budgeted Unit Sales 2200 6500 6000 Require Units of Available Merchandise 3675 7875 6935 Budgeted Beginning Inventory Units -615 -1475 -1375 Budgeted Purchase Units 3060 6400 5560 Budgeted Cost Per Unit 110 110 110 Budgeted Cost of Merchandise Purchases 336600 704000 611600