Montrose instrumentation produces easurement equipment. One component, us in a variety of the company's products, is 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 44,000 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 35,750 29,750 31,250 36,800 33,400 45,360 Parts are purchased at a wholesale price of $59. 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 44,500 parts in January
Montrose instrumentation produces easurement equipment. One component, us in a variety of the company's products, is 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 44,000 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 35,750 29,750 31,250 36,800 33,400 45,360 Parts are purchased at a wholesale price of $59. 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 44,500 parts in January
Chapter1: Financial Statements And Business Decisions
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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
44,000 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
35,750
29,750
31,250
36,800
33,400
45,360
Parts are purchased at a wholesale price of $59. 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 44,500
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.
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