Question

Schrank Company is trying to decide how many units of merchandise to order each month. Company policy is to have 30% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 35,000 units, 25,000 units, and 45,000 units, respectively. How many units must be purchased in September?

Answer 1

31,000 units

Step-by-step explanation:

Calculation for how many units must be purchased in September

Using this formula

Purchase = (Percentage of the month's sales in inventory × Projected sales for October + Projected sales for September - (Percentage of the month's sales in inventory ×Projected sales for September)

Let plug in the formula

Purchase =(30%× 45,000) + 25,000 - (30% × 25,000)

Purchase =13,500+25,000 -(7,500)

Purchase =38,500-7,500

Purchase =31,000 Units

Therefore 31,000 units must be purchased in September