Montrose Instrumentation produces measurement equipment. One component, used in a variety of the company's products, is...

  

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 35,750 29,750 April May 31,250 36,800 June July 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. 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 35,750 29,750 April May 31,250 36,800 June July 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.

Answer rating: 100% (QA)

a To estimate purchases of the component for February and March we need to calculate the total numbe... View the full answer