PRODUCT COSTS In Nov of 2019, cach lawn chair costs Hedror $4 per unit. Per an existing contract, the cost of each chair is scheduled to increase by 5% on May 1, 2020. In addition, because of increasing costs of plastic webbing, the cost is anticipated to increase by an additional 5% on Sept 1, 2020 PRODUCT SALES Hedor sells cach chair for $10 per unit Projected Sales units: Year 2019 2020 Month Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dec Jan Amt 11,250 11,600 10,000 11,400 12.600 15,000 18,000 22,000 18,000 18,000 17.000 16,500 12.000 12,500 11,000 2021 To offset increasing costs of the chairs, the company plans to raise the sales price to $11.25 per unit beginning Sept 1, 2020. The sales forecast (i.c., estimated sales in units) takes this price increase into account. CREDIT SALES Monthly sales are 30% cash sales, 70% credit sales. 30% of credit sales are collected in the month of sale, 50% are collected the following month, and 16% are collected the 24 month after sale. The remaining receivables are deemed uncollectible at the end of the 24 month after sale. Bad debts are written off in the month the debt is deemed uncollectible PRODUCT INVENTORY The firm's policy regarding inventory is to maintain their stock (1.c. have in ending inventory) at 40% of the forecasted sales in units for the next month. Hedror, uses the first in, first-out (FIFO) method in accounting for inventories. M P 0 R s H ONLY Pink Cells can contain a keyed-in number Yellow cells must only contain formula Hedron, Inc. Sales Budget For Year Ending Dec 31, 2020 Jun 20 Jul 20 Aug 20 Feb 20 Mar20 Apr 20 May 20 Sep 20 Oct 20 Nov 20 Dec 20 Annual Total Jan 21 Nov 19 45,000 112,500.00 S Dec 19 46,400 116.000.00 Jan 20 40.000 100,000.00 S Name: 2 3 4 5 6 7 B Budged unit sales 9 Seling price per unit 10 Total Sales 11 12 Cash Sales 13 Credit Sales % 14 15 Cash Sales 16 Credit Sales 17 Total Sales 18 19 20 Current month AR Collections 21 1 month prior AR Collections 2 months prior AVR Collections 23 Uncollectible 24 22