Question
Victoria Co. expects sales of 2,000 units of K1 in January. K1 is its most popular high performance laptop model. The sales manager is confident
Victoria Co. expects sales of 2,000 units of K1 in January. K1 is its most popular high performance laptop model. The sales manager is confident that the total sales will have a 20% growth rate each month from the month before. Each unit requires 10 sets of micro chip. The unit cost of a micro chip is $5 per unit. The firm has a policy to maintain inventory at the end of each month equal to 30% of the following month's estimated sales. The same policy applies also to the micro chips and components required to assemble the finished product. Required:
1. What is the budgeted production (in units) for each of the months January, February, and March? Show your work (i.e., formula and computation)
2. How many sets of micro chip does the company plan to purchase in January and February? Show your work (i.e., formula and computation)
3. How much is the total costs in dollars of the micro chip does the company plan to purchase in January and February? Show your work (i.e., formula and computation) .
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