Question
Aztec Company sells its product for $160 per unit. Its actual and projected sales follow. Units Dollars April (actual) 8,000 $1,280,000 May (actual) 1,800 288,000
Aztec Company sells its product for $160 per unit. Its actual and projected sales follow. Units Dollars April (actual) 8,000 $1,280,000 May (actual) 1,800 288,000 June (budgeted) 6,500 1,040,000 July (budgeted) 7,000 1,120,000 August (budgeted) 3,600 576,000 All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sale, 50% in the month after the sale, 24% in the second month after the sale, and 6% proves to be uncollectible. The products purchase price is $110 per unit. All purchases are payable within 12 days. Thus, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has a policy to maintain an ending monthly inventory of 23% of the next months unit sales plus a safety stock of 95 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,224,000 and are paid evenly throughout the year in cash. The companys minimum cash balance at month-end is $110,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $110,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 11% interest rate. On May 31, the loan balance is $48,000, and the companys cash balance is $110,000. (Round final answers to the nearest whole dollar.)
Prepare a table that shows the computation of budgeted ending inventories (in units) for April, May, June, and July.
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