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

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

(1) The company’s policy is to have inventory on hand at the end of each month equal to 25% of the following month’s sales requirement.

(2) The company’s policy is to keep each month’s ending inventory to a minimum without letting it fall below 5,000 medallions. Assume that the December | inventory has 5,000 medallions and that the company’s only supplier is willing to sell a maximum of 125,000 medallions to the company per month.

Top Dog Pet Store sells dog food in 20-pound bags for $10 per bag, which it buys from its supplier for $6 per bag. Top Dog estimates that its sales of bags of dog food for the second quarter of the year will be as follows:

April 1,200 bags May 1,400 June 1,500:  lp85