Cubs Incorporated manufactures a product with a selling price of $60 per unit. Units and monthly cost
Question:
Cubs Incorporated manufactures a product with a selling price of $60 per unit. Units and monthly cost data follow:
Cubs, Inc. pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts. Cubs, Inc. desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2017, inventories are in line with these policies. Actual unit sales for December and budgeted unit sales for January, February, and March of 2017 are as follows:
Additional information:
- The January 1 beginning cash is projected as $6,000.
- For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost.
- Each unit of finished product requires one unit of raw materials.
- Cubs, Inc. intends to pay a cash dividend of $12,000 in January.
NOTE:
For the entire problem - do not use any negative signs with your answers unless appropriate for net income(loss) or ending balance.
Required:
(a) A production budget for January and February.
(b) A purchase budget in units for January
(c) A manufacturing cost budget for January
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen