Lakeside Components wishes to purchase parts in one month for sale in the next. On May 31, the company has 10,000 parts in stock, although sales for the next month (June) are estimated to total 13,600 parts. Total sales of parts are expected to be 13,400 in July and 11,000 in August.
Parts are purchased at a wholesale price of $25. The supplier has a financing arrangement by which Lakeside Components pays 60 percent of the purchase price in the month when the parts are delivered and 40 percent in the following month. Lakeside purchased 14,000 parts in May.
Required:
a. Estimate purchases (in units) for June and July.
b. Estimate the cash required to make purchases in June and July.