How do you computer prior month purchases (dec) to get total material payments for Jan?

The Denver Corporation has forecast the following sales for the first seven months of the year:
January $10,000 May $10,000
February 12,000 June 16,000
March 14,000 July 18,000
April 20,000

Monthly material purchases are set equla to 30 percent of forecasted sales for the enxt month. Of the total material cost, 40 percent are paid in themonth of purcahse and 60 percent in the following month. Labor costs will run $4,000 per month, an fixed overhed is $2,000 per month. INterest payments on the debt will be $3,000 for both March and June. Finally, the Denever sales force will receive a 1.5 percent commission on total sales for the first six months the year, to be paid on June 30.

Prepare monthly summary of cash payments for the six month period from Jan - June.

morgaine300

You calculate December's purchases the same way you would the rest of the months. You don't need the sales for December, since purchases are based on the next month's sales. i.e. it's 30% of January's sales.