Question
Production cash outflow.California Cement Company produces its products two months in advance of anticipated sales and ships to warehouse centers the month before sale. The
Production cash outflow.California Cement Company produces its products two months in advance of anticipated sales and ships to warehouse centers the month before sale. The inventory safety stock is 15% of the anticipated month's sale. Beginning inventory in September 2014 was 33,396 units. Each unit costs $2.79. The average sales price per unit is $5.65. The cost is made up of 30% labor, 65% materials, and 5% shipping (to the warehouse). The company pays for labor the month of production, shipping the month after production, and raw materials the month prior to production. What is the production cash outflow for products produced in the month of September 2014, and in what months does it occur?Note: September production is based on November anticipated sales. The following are the fourth-quarter sales for 2014:
$1,796,000 (October)
$1,509,000 (November)
$2,142,000 (December)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started