Milkway Dairy Blend buys and resells 5 gallons containers of Greek yogurt for $38 per container.Milkway pays $20 per container to buy the yogurt.Additionally, Milkway has the following information:
-Operating fixed costs are $95,000 per month and office furniture depreciation is $7,000 per month
-Inventory at the end of each month is maintained at 30% of the next month's projected sales
-All sales are on credit.Collections are made 40% in the month of sale and 60% in the month after sale
-All selling and administrative expenses are paid in the month after they are incurred
-Inventory purchases are paid 30% in the month of purchase and 70% in the month after purchase
-Budgeted monthly unit sales for the first five months of 2017 are as follows: $$\begin{array} { l l }
\text { January } & 11,000 \text { containers } \
\text { February } & 13,000 \text { containers } \
\text { March } & 15,000 \text { containers } \
\text { April } & 14,000 \text { containers } \
\text { May } & 18,000 \text { containers }
\end{array}$$
In the month of March, how many containers of yogurt will be purchased?

Question

Milkway Dairy Blend buys and resells 5 gallons containers of Greek yogurt for $38 per container.Milkway pays $20 per container to buy the yogurt.Additionally, Milkway has the following information:
-Operating fixed costs are $95,000 per month and office furniture depreciation is $7,000 per month
-Inventory at the end of each month is maintained at 30% of the next month's projected sales
-All sales are on credit.Collections are made 40% in the month of sale and 60% in the month after sale
-All selling and administrative expenses are paid in the month after they are incurred
-Inventory purchases are paid 30% in the month of purchase and 70% in the month after purchase
-Budgeted monthly unit sales for the first five months of 2017 are as follows: $$\begin{array} { l l } 
\text { January } & 11,000 \text { containers } \
\text { February } & 13,000 \text { containers } \
\text { March } & 15,000 \text { containers } \
\text { April } & 14,000 \text { containers } \
\text { May } & 18,000 \text { containers }
\end{array}$$
In the month of March, how many containers of yogurt will be purchased?

Quizplus · Accepted Answer

To calculate the number of containers to be purchased in March, we need to consider the sales for March and the inventory requirement for April. March sales are 15,000 units. The inventory at the end of March should be 30% of April's sales (14,000 units), which is 4,200 units. The beginning inventory for March is 30% of March's sales, which is 4,500 units. Therefore, the purchases for March are: 15,000 (March sales) + 4,200 (desired ending inventory) - 4,500 (beginning inventory) = 14,700 units.

Milkway Dairy Blend Buys and Resells 5 Gallons Containers of Greek