The sales department of Jackson Manufacturing, Inc. has completed the following sales forecast for the months of

Question:

The sales department of Jackson Manufacturing, Inc. has completed the following sales forecast for the months of January through March 20XS for its only two products: 40,000 units of X1 to be sold at $$110$ each and 20,000 units of X2 to be sold at $$85$ each. The desired unit inventories at March 31, 20X5, are 10% of the next quarter’s unit sales forecast, which are 50,000 units of X1 and 25,000 units of X2. The January 1, 20X5, unit inventories were 7,000 units of X1 and 1,500 units of X2. Each unit of X1 requires 4 pounds of material R and 2 pounds of material S for its manufacture; X2 requires 2 pounds of R and 3 pounds of S. The purchase cost of R is $$10$ per pound and of S is $$5$ per pound. Materials on hand at January 1, 20X5, were 20,000 pounds of R and 8,000 pounds of S. Desired inventories at March 31, 20X5, are 15,000 pounds of R and 6,000 pounds of S. Each unit of X1 requires 0.5 hours of direct labor in the factory; each unit of X2 requires 1.0 hour of direct labor. The average hourly rate for direct labor is $$12$ per hour. Estimated manufacturing overhead cost is $$8$ per direct labor hour plus $$100,000$ per month. Selling and administrative expenses are estimated to be 10% of sales revenue plus $$200,000$ per month. Cash sales in December 20X4 were $$250,000$ and credit sales were $$2,000,000.$ Cash sales for the first quarter are estimated to be $$200,000$ per month. It is forecast that 40% of the credit sales for the quarter ended March 31, 20X5, will occur in January, 30% in February, and 30% in March. Ofc redit sales (December through March), 40% will be collected as cash in the month of sale and 50% will be collected in the following month. The remainder will be uncollectible. The January 1, 20X5, cash balance was $$60,000.$ The minimum acceptable cash balance at the end of each month is $$50,000.$ Short-term borrowings are made in multiples of $$10,000,$ with interest charged at the rate of 1% per month. The first interest payment is made the month following the borrowing. Cash disbursements (excluding interest on short-term borrowings) are estimated as follows:

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