A companys estimated pattern of costs and revenues for the first four months of 19X7 is as
Question:
A company’s estimated pattern of costs and revenues for the first four months of 19X7 is as follows:
1 One-quarter of the materials are paid for in the month of production and the remainder two months later: deliveries received in November 19X6 were £78,400, and in December 19X6 £74,800.
2 Customers are expected to pay one-third of their debts a month after the sale and the remainder after two months: sales expected for November 19X6 are £398,400, and for December 19X6, £402,600.
3. Old factory equipment is to be sold in February 19X7 for £9,600. Receipt of the money is expected in April 19X7. New equipment will be installed at a cost of £38,000.
One-half of the amount is payable in March 19X7 and the remainder in August 19X7.
4 Two-thirds of the wages are payable in the month they fall due, and one-third a month later: wages for December 19X6 are estimated at £15,900.
5 £50,000 of total monthly overheads are payable in the month they occur, and the remainder one month later: total overheads for December 19X6 are expected to be £265,200.
6 The opening bank balance at 1 January 19X7 is expected to be an overdraft of £10,600.
Required:
Step by Step Answer:
