Templeton Enterprises expects the following unit sales over the next few months:MonthUnit SalesJune100,000July120,000August135,000September150,000October140,000November125,000Templeton's goal is to maintain an inventory equal to a 6-day supply. May 31 inventory is projected to be 18,000 units.Required:Prepare a purchases budget (in units) for Templeton for as many months as is possible based on data provided. Assume a 30-day month
What will be an ideal response?
| June | July | August | Sept | Oct | Nov | |||||||||||||
| Sales (units) | 100,000 | 120,000 | 135,000 | 150,000 | 140,000 | 125,000 | ||||||||||||
| + Ending Inventory | 24,000 | 27,000 | 30,000 | 28,000 | 25,000 | |||||||||||||
| - Beginning Inventory | (18,000) | (24,000) | (27,000) | (30,000) | (28,000) | |||||||||||||
| Purchases | 106,000 | 123,000 | 138,000 | 148,000 | 137,000 | |||||||||||||
6-day supply = 6/30 = 20%.
Ending Inventories: June: 120,000 × 20% = 24,000; July: 135,000 × 20% = 27,000; August: 150,000 × 20% = 30,000; Sept: 140,000 × 20% = 28,000; Oct: 125,000 × 20% = 25,000; Nov: cannot be determined.
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