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 $1.25 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 12,900 February 18,100 March 13,200 April 14,400 May 10,400 June 7,900 Required: a. & b. Estimate purchases (in units) and cash required to make purchases in January, February, and March.

Answer 1

Particulars Sold units Add :: Closing inventory Units Needed Less :: Opening inventory Purchases units Purchase price Purchase cost (cash required to pay ) January February March 129001 18100 13200 45700 38000 32700 58600 56100 45900 290001 45700 38000 29600 10400 7900 1.25 1.25 1.25 37000) 13000 9875