managerial accounting

The ABC Company manufactures and sells a

Looeonl eroduct that has peak sales in the

third quarter,

The following information concerns operations

for year 2 - the coming year and for the first twc

quarter s of year

a. The company's single product sells for BD:

10 per unit. Budgeted sale in units for the next

SIX

quarters are as follows (sales are on credit)

Year 2 quarter

3 quarter

ear

3

1

4

Budgeted unit sales -

50000

80000

60000

120000

75000

2 90000

Sales are collected in the following pattern:

75% in the quarter the sales are made, and the

D.

remaining 25% in the following quarter. On

uary 1, year 2, the Compnay's balance

showed BD: 70000/- in accounts receivable, al

of which will be collected in the first quarter of

the year. Bad debts are negligible and can be

gnored.

The company desires an ending finished goods

inventory at the end of each quarter equal to

35%

of the budgeted unit sales for the next quarter.

On December 31, year 1 the company had

hand.

d. Six pounds of raw materials are required to

complete one unit of product. The company

requires

ending raw materials inventory at the end of

each quarter equal to 10 of the following

quarter's

production needs. On December 31, Year1, the

company had 24,000 pounds of raw materials

on

and.

he raw material cost

0.900 per each

k ae ed in the

aterials purchases are paid in the

following

pattern: 60% paid in the quarter the purchase

are made, and the remaining 40% paid in the

following quarter.On January 1, year 2, the

comparny's balance sheet showed BD: 80000

Accounts payable for raw material purchases,

all of which will be paid for in the first quartero

the year.

Required

Prepare the following budoets and schedle

year, showing both quarterly and total

Fescoe

1. A sales Budgets and schedule of expected

cash collections

2. A production Budget

3. A direct materials budget and a schedule of

expected cash payments for purchase of

materials.

4. The principle purpose of cash budget is to

see how much cash the comp

ny will have in

ne

at the end of the year". Do you agree ?

Explain.