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A company manufactures and sells a product, which has seasonal variations in demand with a peak in the third quarter. The following is given: a
A company manufactures and sells a product, which has seasonal variations in demand with a peak in
the third quarter. The following is given:
a During the second year and two quarters of the third year they plan to sell
thousands of items at unit price $
b of sales are collected in the quarter the sales are made, and the remaining in the
following quarter. On January year the balance sheet shows $ in accounts receivable.
c The ending inventory of finished goods should cover of the budgeted sales for the next
quarter. On December year company had units on hand.
d Three pounds of raw materials are needed to produce a single unit. The ending inventory of raw
materials should be at of the budgeted production for the next quarter. On December
year company had pounds of materials on hand.
e The raw materials cost $ per pound. Purchases of raw materials are paid for in the following
way: in the quarter the purchase is made, the remaining in the following quarter. On
January year the balance sheet showed $ in accounts payable.
f It takes minutes to produce a single item and cost of labor hour is $
g Predetermined overhead rate is $ per labor hour, fixed manufacturing overhead is $ per
quarter and depreciation of machines $
h Selling and administrative costs are planned to be $ variable per unit, $ advertising,
$ salaries and $ depreciation per quarter.
i The company has $ in cash at the beginning of the year. It will invest $
$ $ $ in equipment in consecutive quarters. In each quarter $ should
be paid out as dividends. The company can borrow shortterm at
j The land is worth $ buildings and equipment $ with accumulated depreciation
$ Equity is $
Prepare:
The sales budget and the schedule of expected cash collections.
The production budget.
The direct materials purchases budget with a schedule of expected cash payments.
The direct labor budget.
The manufacturing overhead budget.
The calculation of the cost of finished goods per unit. Find the final worth of finished goods
inventory.
The budget for selling and administrative expenses.
The cash budget.
The proforma income statement for year
The balance sheet at the end of year if the following is given:
Balance sheet beginning of year
Cash $ AP $
AR $ Equity $
Inventory: RE $
raw materials $
finished goods $
Land $
Building & equipment $
Less: Accum. depreciation $
Total $ Total $
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