Question

Exercise 13-32 (Static) Estimate Purchases and Cash Disbursements (LO 13-4,5) 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 $3 each and must be paid for in cash. The company has 28,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months: January February March April May June 12,400 17,800 13,200 14,200 9,600 7,200 Required: a. & b. Estimate purchases (in units) and cash required to make purchases in January, February, and March. MIDLAND COMPANY Merchandise Purchases Budget For the Period Ended March 31 (in units) January February March Units to be purchased Estimated cost

Answer 1

	January	February	March
Sales units	12400	17800	13200
Add Desired Ending Inventory	45200	37000	31000
Total Needs	57600	54800	44200
Less Beginning Inventory	28000	45200	37000
Units to be purchased	29600	9600	7200
Cost per tile	$                         3	$                     3	$                 3
Purchase cost	$               88,800	$           28,800	$       21,600

Ending Inventory
January =17800+13200+14200
February =13200+14200+9600
March =14200+9600+7200