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Question - Budgeting
RSPCA Pet Shop sells pet food in 20-kilogram bags for $20 per bag, which it buys from its supplier for $12 per bag. RSPCA estimates that its sales of bags of pet food for the second quarter of the year will be as follows:
April 2 400 Bags
May 2 800 Bags
June 3 000 Bags
RSPCA's policy is to have bags of pet food on hand at the end of each month equal to 10 per cent of the next month's budgeted sales (bags). It expects to have 240 bags of pet food on hand at the end of March and to sell 3300 bags in July.
RSPCA expects its cost of purchases to be $26 340 in March; it pays for its purchases in the following month.
Required - Arrange a purchases budget for RSPCA for bags of pet food for the second quarter of this year and show cash payments for the months of April, May and June.
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