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 $1.00 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: 5 oints Skipped January February March April May June 13,400 17,100 13,200 13,600 8,700 6,600 eBook Print Required: a. & b. Estimate purchases (in units) and cash required to make purchases in January, February, and March. References MIDLAND COMPANY Merchandise Purchases Budget For the Period Ended March 31 (in units) January February Units to be purchased March Estimated cost

Answer 1

Solution

Merchandise purchase budget
	January	February	March
Units to be purchased	29300	8700	6600
Estimated cost	$ 29,300.00	$ 8,700.00	$ 6,600.00

Working

	January	February	March	April	May	June
Units to be sold	13400	17100	13200	13600	8700	6600
Desired Ending Finished Inventory	43900	35500	28900
Total Units needed	57300	52600	42100
Less : Beginning Finished Inventory	28000	43900	35500
Units to be Produced	29300	8700	6600
Cost per tile	$            1.00	$          1.00	$          1.00
Estimated cost	$ 29,300.00	$ 8,700.00	$ 6,600.00