Ospika Products has projected the following sales for the coming year: Sales Q1 $810 Q2 $ 890 Q3 $ 850 Q4 $ 950. Sales in the year following this one are projected to be 10% greater in each quarter.
a. Calculate payments to suppliers assuming
that Ospika places orders during each quarter equal to 30% of
projected sales for the next quarter. Assume that Ospika pays
immediately.
b. Calculate payment to suppliers assuming a
90-day payables period.
c. Calculate payment to suppliers assuming a 60-day payables
period.
| Current year | Next year | |||||
| Q1 | Q2 | Q3 | Q4 | Q1 | ||
| Estimated sale | $ 810.00 | $ 890.00 | $ 850.00 | $ 950.00 | $1,045.00 | |
| Orders places= 30% of sale of next quarter | =890*30% | =850*30% | =950*30% | =1045*30% | ||
| Orders places= 30% of sale of next quarter | $ 267.00 | $ 255.00 | $ 285.00 | $ 313.50 | ||
| Solution a | ||||||
| Payment in same quarter of placing order | $ 267.00 | $ 255.00 | $ 285.00 | $ 313.50 | ||
| Solution b | ||||||
| Payable in 90 days period so 1 period purchase will be paid in next quarter | ||||||
| So next quarter is purchased in current quarter and paid in next quarter so we can say each quarter 30% is paid in same quarter | =810*30% | =890*30% | =850*30% | =950*30% | ||
| Payment | $ 243.00 | $ 267.00 | $ 255.00 | $ 285.00 | ||
| Solution c | ||||||
| Payable in 60 days period so 1 quarter purchase of 1/3rd will be paid in same quarter and rest in next quarter | ||||||
| Same quarter payment | =267*1/3 | =255*1/3 | =285*1/3 | =313.5*1/3 | ||
| Next quarter payment | =243*2/3 | =267*2/3 | =255*2/3 | =285*2/3 | ||
| Same quarter payment | $ 89.00 | $ 85.00 | $ 95.00 | $ 104.50 | ||
| Next quarter payment | $ 162.00 | $ 178.00 | $ 170.00 | $ 190.00 | ||
| Total payment in quarter | $ 251.00 | $ 263.00 | $ 265.00 | $ 294.50 |
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