Question
The Volt Battery Company has forecast its sales in units as follows: January 2,100 May 2,650 February 1,950 June 2,800 March 1,900 July 2,500 April
The Volt Battery Company has forecast its sales in units as follows:
January | 2,100 | May | 2,650 | |
February | 1,950 | June | 2,800 | |
March | 1,900 | July | 2,500 | |
April | 2,400 | |||
Volt Battery always keeps an ending inventory equal to 110% of the next months expected sales. The ending inventory for December (Januarys beginning inventory) is 2,260 units, which is consistent with this policy. Materials cost $10 per unit and are paid for in the month after purchase. Labor cost is $3 per unit and is paid in the month the cost is incurred. Overhead costs are $12,500 per month. Interest of $9,300 is scheduled to be paid in March, and employee bonuses of $14,500 will be paid in June.
a. Prepare a monthly production schedule for January through June.
January | February | March | April | May | June | July | |
Projected unit sales | |||||||
Desired ending inventory | |||||||
Total units required | |||||||
Beginning inventory | |||||||
Units to be produced |
b. Prepare a monthly summary of cash payments for January through June. Volt produced 1,900 units in December.
December | January | February | March | April | May | June | |
Units produced | |||||||
Material cost | |||||||
Labor cost | |||||||
Overhead cost | |||||||
Interest | |||||||
Employee bonuses | |||||||
Total cash payments |
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