The sales budget for Merita Medallion Company shows budgeted sales (in medallions) for December and the first four months of next year:

Required:
Prepare a budget for the number of medallions Merita needs to purchase in the first three months of next year for each of the following two independent situations:
a The business' policy is to have inventory on hand at the end of each month equal to 15 per cent of the following month's sales requirement.
b The business' policy is to keep each month's ending inventory to a minimum without letting it fall below 5000 medallions. Assume that the 1 December inventory has 5000 medallions and that the business' only supplier is willing to sell a maximum of 125000 medallions to the business per month.

Transcribed Image Text:

December January February March April Medallions 100 000 40 000 90 000 150 000 50 000