Montrose Instrumentation produces measurement equipment. One component, used in a variety of the company's products, is critical and the supply chain often breaks. For that reason, Montrose has a policy to hold in inventory enough of the component to produce three month's worth of sales (one component is used in each unit of product in which it is used). On February 1, the company has 40,000 components in stock. Sales of the units in which the component is used in each of the next six months are estimated to be as follows: February March April May June July 34,750 28,750 30,250 35,800 32,400 44,360 Parts are purchased at a wholesale price of $55. The vendor has a financing arrangement by which Montrose pays 40 percent of the purchase price in the month when the components are delivered and 60 percent in the following month. Montrose purchased 42,500 parts 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Montrose Instrumentation produces measurement equipment. One component, used in a variety of the company's products, is critical
and the supply chain often breaks. For that reason, Montrose has a policy to hold in inventory enough of the component to produce
three month's worth of sales (one component is used in each unit of product in which it is used). On February 1, the company has
40,000 components in stock. Sales of the units in which the component is used in each of the next six months are estimated to be as
follows:
February
March
April
May
June
July
34,750
28,750
30,250
35,800
32,400
44,360
Parts are purchased at a wholesale price of $55. The vendor has a financing arrangement by which Montrose pays 40 percent of the
purchase price in the month when the components are delivered and 60 percent in the following month. Montrose purchased 42,500
parts 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.
Complete this question by entering your answers in the tabs below.
Required A Required B
Estimate purchases of the component (in units) for February and March.
Merchandise to be purchased in units
February
< Required A
March
Required B >
Transcribed Image Text:Montrose Instrumentation produces measurement equipment. One component, used in a variety of the company's products, is critical and the supply chain often breaks. For that reason, Montrose has a policy to hold in inventory enough of the component to produce three month's worth of sales (one component is used in each unit of product in which it is used). On February 1, the company has 40,000 components in stock. Sales of the units in which the component is used in each of the next six months are estimated to be as follows: February March April May June July 34,750 28,750 30,250 35,800 32,400 44,360 Parts are purchased at a wholesale price of $55. The vendor has a financing arrangement by which Montrose pays 40 percent of the purchase price in the month when the components are delivered and 60 percent in the following month. Montrose purchased 42,500 parts 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. Complete this question by entering your answers in the tabs below. Required A Required B Estimate purchases of the component (in units) for February and March. Merchandise to be purchased in units February < Required A March Required B >
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