Question

Purchases Budget Rest Inn provides four-star accommodations for the vacation traveler. It is located just off a major interstate freeway. There are three other competing motels at the same exit. Hotel management is preparing its budget for the busiest three-month period of the year, June through August. To differentiate themselves from the competition, Rest Inn provides a complimentary spa package for each guest stay that includes specialty shampoo, conditioner, soap, lotion, toothpaste, lavender essential oil, slippers, earplugs, and a sleep mask. Rest Inn purchases the spa package from a local vendor that puts the Rest Inn private label on the products. The hotel follows a policy of purchasing enough spa packages to ensure that 40% of next month’s bookings are in the current month’s ending inventory. Rest Inn’s sales budget for guest stays for the next quarter is as follows:

June 2,300 guest stays
July 2,500 guest stays
August 2,100 guest stays
How many spa packages should Rest Inn budget for purchase in July?

Answer 1

2,340

Step-by-step explanation:

The computation of purchase to be made on July is shown below:-

Particulars June July August

Sales 2,300 2,500 2,100

Add: Closing Inventory 1,000 840

(40% of next month)

Less: Opening Inventory 1,000 840

(Closing of previous month)

Purchases to be made 3,300 2,340 1,260

Therefore the purchase to be made on July is 2,340