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Is this correct? IF not, please indicate where. Also, if I have left out any calculations explaining, please add... Thank you. Question 1 (10 marks)
Is this correct? IF not, please indicate where. Also, if I have left out any calculations explaining, please add... Thank you.
Question 1 (10 marks) | ||||||||||
Pottery Manufacturing Limited has projected sales and production in units for the second quarter of the coming year as follows: | ||||||||||
October | November | December | ||||||||
Sales | 50,000 | 40,000 | 60,000 | |||||||
Production | 60,000 | 50,000 | 50,000 | |||||||
Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month, paid in the month incurred. The accounts payable balance on September 30 totals $190,000, which will be paid in October. All units are sold on account (as credit sales) for $14 each. There are no cash sales. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on October 1 totalled $500,000 ($90,000 from August's sales and the remainder from September). | ||||||||||
Required: | ||||||||||
a. Prepare a schedule for each month showing budgeted cash disbursements for the Pottery Manufacturing Limited. (5 marks) | ||||||||||
October | November | December | ||||||||
Acc. Payable | 190000 | |||||||||
October production cost | 120000 | 180000 | ||||||||
November production cost | 100000 | 150000 | ||||||||
December production cost | 100000 | |||||||||
cash disbursements for production cost | 310000 | 280000 | 250000 | |||||||
selling and admin. Expenses | 100000 | 100000 | 100000 | |||||||
Total cash disbursements | 410000 | 380000 | 350000 | |||||||
October | November | December | ||||||||
Units made | 60000 | 50000 | 50000 | |||||||
production cost/unit | 5 | 5 | 5 | |||||||
budgeted production cost | 300000 | 250000 | 250000 | |||||||
October | November | December | ||||||||
cash reciepts of Acc. Recievables | ||||||||||
August sales | 90000 | |||||||||
September sales | 307500 | 102500 | ||||||||
October sales | 420000 | 210000 | 70000 | |||||||
November sales | 336000 | 168000 | ||||||||
December sales | 504000 | |||||||||
Total Cash Receipts | 817500 | 648500 | 742000 | |||||||
October | November | December | ||||||||
Units sold | 50000 | 40000 | 60000 | |||||||
Selling Price/ unit | 14 | 14 | 14 | |||||||
budgeted sales | 700000 | 560000 | 840000 |
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