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Complete the Modeling: a. Sales Budget Quarter Ended December 31, 2013 September October November December Total January February Expected sales in units: 13,000 12,000 14,000
Complete the Modeling: | |||||||||||
a. Sales Budget | Quarter Ended December 31, 2013 | ||||||||||
September | October | November | December | Total | January | February | |||||
Expected sales in units: | 13,000 | 12,000 | 14,000 | 20,000 |
| 9,000 | 10,000 | ||||
Selling price per unit: | $60 | $60 | $60 | $60 | $60 | ||||||
Total Sales: | $780,000 | $720,000 | $840,000 | $1,200,000 | $2,760,000 | ||||||
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b. Cash Collections from: | Quarter Ended December 31, 2013 | ||||||||||
Sales | % Collected | October | November | December | Total | ||||||
September sales: | $780,000 | 64% Collected | $499,200 | $499,200 | |||||||
October sales: | $720,000 | 32% Collected | 230,400 | 230,400 | |||||||
October sales: | $720,000 | 32% Collected | 460,800 | 460,800 | |||||||
November sales: | $840,000 | 0% Collected | 268,800 | 268,800 | |||||||
November sales: | $840,000 | 0% Collected | 537,600 | 537,600 | |||||||
December sales: | $1,200,000 | 0% Collected | 384,000 | 384,000 | |||||||
Total cash collections: | $729,600 | $729,600 | $921,600 | $2,380,800 | |||||||
c. Production Budget | Quarter Ended December 31, 2013 | ||||||||||
Finished Goods | % Budgeted | October | November | December | Total | January | |||||
Beginning Inventory: | 4,800 | 5,600 | 8,000 | 4,800 | 3,600 | ||||||
Units to be produced: | 12,800 | 16,400 | 15,600 | 44,800 |
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Goods available for sale: | 17,600 | 22,000 | 23,600 | 49,600 | 13,000 | ||||||
Desired ending inventory: | 40% Budgeted | 5,600 | 8,000 | 3,600 | 3,600 | 4,000 | |||||
Quantity of goods sold: | 12,000 | 14,000 | 20,000 | 46,000 | 9,000 | ||||||
d. Materials Purchases Budget | October | November | December | Total | January | ||||||
Units to be produced: | 12,800 | 16,400 | 15,600 | 44,800 | 9,400 | ||||||
Pounds required for each unit: | 5 | ||||||||||
Total pounds used in production: | 64,000 | 82,000 | 78,000 |
| 47,000 | ||||||
Quarter Ended December 31, 2013 | |||||||||||
Raw Materials | % Budgeted | October | November | December | Total | ||||||
Beginning Inventory: | 19,200 | 24,600 | 23,400 | 19,200 | |||||||
Purchases of materials: | 69,400 | 80,800 | 68,700 | 218,900 | |||||||
Materials available for use: | 88,600 | 105,400 | 92,100 | 238,100 | |||||||
Desired ending inventory: | 30% Budgeted | 24,600 | 23,400 | 14,100 | 14,100 | ||||||
Total pounds used in production: | 64,000 | 82,000 | 78,000 | 224,000 | |||||||
e. Cash Payments for: | October | November | December | Total | |||||||
Purchases of materials: | 69,400 | 80,800 | 68,700 | 218,900 | |||||||
Cost per pound of raw material: | $4.00 | ||||||||||
Total cost of raw material purchases: | $277,600 | $323,200 | $192,360 | $869,120 | |||||||
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Quarter Ended December 31, 2013 | |||||||||||
Purchases | % Paid | October | November | December | Total | ||||||
September Net A/P: | $75,960 | $75,960 | |||||||||
October purchases: | $277,600 | 70% Paid | 194,320 | 194,320 | |||||||
October purchases: | $277,600 | 70% Paid | 83,280 | 83,280 | |||||||
November purchases: | $323,200 | 0% Paid | 226,240 | 226,240 | |||||||
November purchases: | $323,200 | 0% Paid | 96,960 | 96,960 | |||||||
December purchases: | $192,360 | 0% Paid | 192,360 | 192,360 | |||||||
Total cash payments: | $270,280 | $309,520 | $289,320 | $869,120 | |||||||
The purchasing manager is evaluating an alternative supplier that would provide a slightly lower grade of raw | ||||||
material at a savings from the current price of $4 per pound. The new price would be at $3.50 per pound but | ||||||
the product would now require six pounds of the lower grade of raw material to produce the same number of | ||||||
good finished units as currently achieved. Would you recommend the change to the new supplier? What if the | ||||||
new price was to be $3.00? How about a price of $3.285307? Explain your answers. | ||||||
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