Question
Davies shows the following information for the Sales Budget for next quarter: Month Units Sales January 10,000 $200,000 February 30,000 $600,000 March 40,000 $800,000 Requirement
Davies shows the following information for the Sales Budget for next quarter:
Month Units Sales
January 10,000 $200,000
February 30,000 $600,000
March 40,000 $800,000
Requirement 1: Assume Davies plans to begin January with 2,000 units and requires ending inventory to be equal to 20% of next month's sales. Compute the required number of units to be produced in February. Show your computations.
Requirement 2: Assume each unit requires .4 hours of labor costing $15.00 per hour. Compute the Direct Labor budget for February. Show your computations.
Requirement 3: Assume all sales are on credit. Credit sales are collected at the rate of 60% in the month of sale and 40% in the month following the sale. Accounts receivable at December, 31 is expected to be $40,000. Compute the cash collected from customers for the month of February. Show your work.
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