Problem 1

Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are plannned for the year 20x1. Four units of raw material are required to produce each unit of finished product.

January 1 December 31

Raw material 44,000 48,000

Work in process 15,000 1 5,000

Finished goods 91,000 74,000

Required:

1. If Bodin Company plans to sell 452,000 units during the year, compute the number of units the firm would have to manufacture during the year.
2. If 507,000 finished units were to be manufactured by Bodin Company during the year, determine the amount of raw material to be purchased.

Problem 2

Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.

70 percent collected in the month of sale.

15 percent collected in the first month after sale.

10 percent collected in the second month after sale.

4 percent collected in the third month after sale.

1 percent uncollectible.

The sales on account have been budgeted for the last seven months as follows:

June$126,500

July154,000

August179,000

September208,000

October233,000

November258,000

December220,500

Required:

1. Compute the estimated total cash collections during October from credit sales.
2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.