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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
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 the company has 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
April
May
June
July
Parts are purchased at a wholesale price of $ The vendor has a financing arrangement by which Montrose pays percent of the purchase price in the month when the components are delivered and percent in the following month. Montrose purchased parts in January.
Required:
Estimate purchases of the component in units for February and March.
Estimate the cash disbursements for the component in February and March.
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