Jones Corp. Balance Sheet, December 31 Cash $41,700 Accounts receivable 192,000 Raw materials 102,240 Finished goods 64,400 Land 50,000 Plant and equipment $500,000 Less: accumulated depreciation 112,000 388,000 Total assets $838,340 Accounts payable to suppliers $40,000 Common Stock $100,000 Retained Earnings 698,340 798,340 Total liabilities and equity $838,340 Estimated sales of product Z January 7,000 February 8,000 March 10,000 April 8,000 May 7,000 Selling price $50 Collections from customers Collected in month of sale 40% Collected the following month 60% Desired finished goods inventory (% of next month's unit sales) 20% Desired raw material inventory (% of next month's production needs) 25% Raw material units needed to produce one Product Z "Parts" 5 B. Inventory units & cost Product Z 1,400 $46.00 "Parts" 18,000 $4.00 Purchases Paid in the month of purchase 70% Paid in the subsequent month 30% Direct labor time to produce one Product Z 0.5 hours Cost of direct labor $24 per hour Factory overhead $12 per direct labor hr. Selling and administrative expenses $10,000 fixed 10% variable (Sales) Plant and equipment depreciation $12,000 per year