Montrose Instrumentation produces measurement equipment. One component, used in a variety of the company's products, is criticaland the supply chain often breaks. For that reason, Montrose has a policy to hold in inventory enough of the component to producethree month's worth of sales (one component is used in each unit of product in which it is used). On February 1, the company has31,000 components in stock. Sales of the units in which the component is used in each of the next six months are estimated to be asfollows:FebruaryMarch32,50026,500AprilMay28,00033,550JuneJuly30,15042,110Parts are purchased at a wholesale price of $46. The vendor has a financing arrangement by which Montrose pays 40 percent of thepurchase price in the month when the components are delivered and 60 percent in the following month. Montrose purchased 38,000parts in January.Required:a. Estimate purchases of the component (in units) for February and March.b. Estimate the cash disbursements for the component in February and March.

The objective of the question is to estimate the purchases of the component (in units) for February…

Answered: Montrose Instrumentation produces…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterC: Cases

Section: Chapter Questions

Problem 1C

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Scalia Systems manufactures rugged handheld computers for use in adverse working environments. Scalia tries to maintain inventory at 40% of the following month's expected unit sales. Scalia began the year with 8,000 units in stock, based on the following unit sales projections prepared by the sales manager: January 20,000 February 25,000 March 18,000 April 22,000 Prepare a schedule of planned unit production for January through March. January February March
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Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the first 3 months of the coming year is: January 43,800 February 41,000 March 50,250 Each drum requires 5.5 gallons of chemicals and one plastic drum container. Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60. Required: Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January? Prepare a direct materials purchases budget for chemicals for the months of January and February. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to…

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