In: Accounting
Dax Company forecasts the following sales in units for the next three months:
May 50,000
June 60,000
July 45,000
Each unit sells for $15.00 and costs $11.00 to purchase. Dax Company needs to have 40% of the next month’s sales in inventory at the end of each month and pays cash for 30% of purchases. The remainder of the purchases are paid for in the month following the purchase. The balance of Accounts Payable at the end of April is $375,000 and Dax has 16,000 units on hand.
Required:
1. Prepare a purchases budget in units for May and June.
2. Prepare a cash disbursements budget for purchases for May and June.