Question
Buckeye Inc. uses the sales forecast to plan production. The company produces a glow-in-the-dark cup called Lights-Out one month in advance of the forecasted sale.
Buckeye Inc. uses the sales forecast to plan production. The company produces a glow-in-the-dark cup called "Lights-Out" one month in advance of the forecasted sale. The January sales forecast of 20 units of these cups will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can differ, and the company has a policy of having 20% in inventory to accommodate sales above forecast. Raw materials for Lights-Out are acquired the month ahead (in this case, November). Wages are paid in the current month of production (December). Utilities are paid a month after production (January) and shipping is paid a month after the sale (two months after production, February). Finally, an inventory count reveals that there are currently 4 units on hand above the projected sales for November (at the start of November when the raw material order is placed). Unit production costs are $40 for raw materials, $20 for wages, $10 for utilities, and $5 for shipping. Determine the amounts of cash outflows for December's production.
Raw material of $400 paid in November, Wages of $800 paid in December, Utilities of $200 paid in January, Shipping of $100 paid in February | ||
Raw material of $800 paid in November, Wages of $400 paid in December, Utilities of $200 paid in January, Shipping of $100 paid in February | ||
Raw material of $800 paid in November, Wages of $400 paid in December, Utilities of $100 paid in January, Shipping of $100 paid in February | ||
Raw material of $800 paid in November, Wages of $400 paid in December, Utilities of $200 paid in January, Shipping of $200 paid in February |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started