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Eliot Sprinkler Systems produces equipment for lawn irrigation. One of the parts used in selected Eliot equipment is a specialty nozzle. The budgeting team
Eliot Sprinkler Systems produces equipment for lawn irrigation. One of the parts used in selected Eliot equipment is a specialty nozzle. The budgeting team is now determining the purchase requirements and monthly cash disbursements for this part. Eliot wishes to have in stock enough nozzles to use for the coming month. On August 1, the company has 16,900 nozzles in stock, although the latest estimate for August production indicates a requirement for only 15,200 nozzles. Total uses of the nozzle are expected to be 14,900 in September and 15,740 in October. Nozzles are purchased at a wholesale price of $9. Eliot pays 25 percent of the purchase price in cash in the month when the parts are delivered. The remaining 75 percent is paid in the following month. Eliot purchased 22,000 parts in July. Required: a. Estimate purchases of the nozzle (in units) for August and September. b. Estimate the cash disbursements for nozzles in August and September.
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