Problem
Top Dog Pet Store sells dog food in 20-pound bags for $10 per bag, which it buys from its supplier for $7 a bag. Top Dog estimates that its sales of bags of dog food for the second quarter of the year will be as follows:
April 1,200 bags
May 1,400
June 1,500
Top Dog's Policy is to have bags of dog food on hand at the end of each month equal to 10% of next month's budgeted sales. It expects to have 120 bags of dog food on hand at the end of March and expects to sell 1,650 in July. Top Dog expects its cost of purchases to be $7,770 in March; it pays for its purchases in the following month.
Required: Prepare a purchases budget for bags of dog food for the second quarter of this year for Top Dog.
How many bags of dog food did Top Dog expect to sell in March?