Answered: Exercise 13-33 (Algo) Estimate…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 45BEB: Pilsner Inc. purchases raw materials on account for use in production. The direct materials...

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Exercise 13-33 (Algo) Estimate Purchases and Cash Disbursements (LO 13-4, 5)

Lakeside Components wishes to purchase parts in one month for sale in the next. On June 1, the company has 14,000 parts in stock, although sales for June are estimated to total 11,900 parts. Total sales of parts are expected to be 13,600 in July and 12,600 in August.

Parts are purchased at a wholesale price of $25. The supplier has a financing arrangement by which Lakeside Components pays 60 percent of the purchase price in the month when the parts are delivered and 40 percent in the following month. Lakeside purchased 18,000 parts in May.

Required:
a. Estimate purchases (in units) for June and July.
b. Estimate the cash required to make purchases in June and July.

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