(3) pounds of direct materials is needed to produce one unit. Irrigation likes to keep 5% of the materials needed for the next months production in its ending inventory. Raw materials on hand on December 31, 2020, totaled 12,295 pounds.

Payment for materials is made within 10 days. 70% is paid in the month of purchase, and 30% is paid after the month of purchase. Accounts payable on December 31, 2020, totaled $130,595.

NB: You are to determine the price per pound logically from the information provided here.

Sales:

Sales for December 2020102,100 units

Expected sales for January 2021113,000 units

Expected sales for February 2021112,500 units

Expected sales for March 2021116,000 units

Expected sales for April 2021125,000 units

Expected sales for May 2021137,500 units

Selling price per unit$4

Irrigation likes to keep 10% of the next months unit sales in ending inventory.

All sales are on credit. 95% of the accounts receivable are collected in the month of sale and 5% of the accounts receivable are collected in the month after sale. Accounts receivable on December 31, 2020, totaled $183,780.

Direct Labor

Labor requires 10 minutes per unit for completion and is paid at a rate of $15 per hour.

Manufacturing Overhead

Indirect materials$0.35 per direct labor hour

Indirect labor $0.55 per direct labor hour

Utilities$0.50 per direct labor hour

Maintenance $0.30 per direct labor hour

Factory supervisors salary $40,200 per month

Factory Depreciation $18,600 per month

Property taxes$ 2,765 per month

Insurance$ 1,020 per month

Repairs$ 1,030 per month

Selling and Administrative expenses

Salaries$70,200 per month

Advertising$10,500 per month

Insurance$ 1,040 per month

Office Depreciation $ 2,050 per month

Miscellaneous fixed costs$ 3,050 per month

Commission$0.20 per unit of sales

Further information

The cash balance on December 31, 2020, totaled $700,500.

Management has decided it would like to maintain a monthly cash balance of at least $300,000 beginning on January 31, 2021.

The company receives dividends @ $0.50 per share for 150,000 shares each month.

The company has an open line of credit with National Bank. The terms of the agreement require borrowing to be in the increments of $10,000, and the interest rate is 6% pa. Irrigation borrows on the first day of the month and repays on the last day of the month if possible.

A $300,000 equipment purchase is planned for February 2021.