Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Western Company has projected sales and production in units for the second quarter of the coming year as follows: April May June Sales 55,000 45,000
Western Company has projected sales and production in units for the second quarter of the coming year as follows: | |||||||||
April | May | June | |||||||
Sales | 55,000 | 45,000 | 65,000 | ||||||
Production | 65,000 | 55,000 | 55,000 | ||||||
Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month, paid in the month incurred. The accounts payable balance on March 31 totals $193,000, which will be paid in April. | |||||||||
All units are sold on account (as credit sales) for $16 each. There are no cash sales. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $520,000 ($100,000 from February's sales and the remainder from March). | |||||||||
Required: | Clearly label whether your calculations are for part a. or part b. | ||||||||
a. Prepare a schedule for each month showing budgeted cash disbursements for the Western Company. (5 marks) | |||||||||
b. Prepare a schedule for each month showing budgeted cash receipts for the Western Company. (5 marks) |
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