Question 2(CLO5) (5 Marks) Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 150,000 finished units in inventory on June 30 . INSTRUCTIONS: Prepare the production budget from July up to the end of September. Mckerchie Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as G62. Data concerning this product are given below: The above per unit data are based on annual production of 12,000 units of the component. Direct labor can be considered a variable cost. The company has received a special, one-time-only order for 400 units of component G62. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Mckerchie has no excess capacity and this special order would require 50 minutes of the constraining resource, which could be used instead to produce products with a total contribution margin of $6,900. INSTRUCTIONS: 1. What is the minimum price per unit on the special order below which the company should not go? 2. What is the current contribution margin per unit for component G62 based on its selling price of $160 and its annual production of 12,000 units? Question 3(CLO5) (5 Marks) Budgeted sales in Allen Company over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder is uncollectible. Instructions: Prepare the cash collections schedule for December. Question 2(CLO5) (5 Marks) Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 150,000 finished units in inventory on June 30 . INSTRUCTIONS: Prepare the production budget from July up to the end of September. Mckerchie Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as G62. Data concerning this product are given below: The above per unit data are based on annual production of 12,000 units of the component. Direct labor can be considered a variable cost. The company has received a special, one-time-only order for 400 units of component G62. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Mckerchie has no excess capacity and this special order would require 50 minutes of the constraining resource, which could be used instead to produce products with a total contribution margin of $6,900. INSTRUCTIONS: 1. What is the minimum price per unit on the special order below which the company should not go? 2. What is the current contribution margin per unit for component G62 based on its selling price of $160 and its annual production of 12,000 units? Question 3(CLO5) (5 Marks) Budgeted sales in Allen Company over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder is uncollectible. Instructions: Prepare the cash collections schedule for December
