Question

MC Qu. 93 Schrank Company is trying to decide how... Schrank Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 25% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 48,000 units, 38,000 units, and 58,000 units, respectively. How many units must be purchased in September

Answer 1

Answer:

43,000 units

Explanation:

Given that,

Projected sales in August = 48,000

Projected sales in September = 38,000

Projected sales in October = 58,000

Ending inventory is the 25% of the next month's sales.

The units purchased in the month of September includes the amount of sales in this month and the amount of ending inventory for this month but the amount of beginning inventory excludes from this calculation of purchases.

Ending inventory for September:

= 25% of the next month's sales

= 0.25 × Sales in October

= 0.25 × 58,000

= 14,500

Here, the opening inventory for September is the amount of ending inventory for August.

Opening inventory for September:

= 0.25 × Sales in September

= 0.25 × 38,000

= 9,500

Units to be purchased:

= Sales in September + Ending inventory for September - Opening inventory for September

= 38,000 units + 14,500 - 9,500

= 43,000 units

Answer 2

Answer:

43,000 units

Explanation:

The calculation of purchased units is shown below:-

Units to be Purchased (September) = Sales + (Ending Inventory for September) - (Opening Inventory for September)

= 38,000 + (25% × 58,000) - (25% × 38,000)

= 38,000 + 14,500 - 9,500

= 52,500 - 9,500

= 43,000 units

Therefore for computing the units to be purchased in September we simply applied the above formula.