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You are the cost accountant at Poseys Pet Emporium, tasked with preparing quarterly budgets that determine the cash effects of the companys sales and production-related
You are the cost accountant at Poseys Pet Emporium, tasked with preparing quarterly budgets that determine the cash effects of the companys sales and production-related expenditures. The company uses a calendar year, and it is time to prepare the third-quarter budget. You have the following information:
- The budgeted selling price for the year is $4.99 per unit. Sales volumes are budgeted as follows for the last month of quarter two, for all of quarter three, and for part of quarter four.
June | July | August | September | October |
---|---|---|---|---|
33,500 | 32,000 | 35,200 | 35,000 | 34,000 |
- Historically, 20% of Poseys sales are cash sales. Of the remaining credit sales, 45% are collected in the month of sale, while 52% are collected the following month. The remainder is deemed uncollectible.
- Management sets its ending finished goods inventory goal at 15% of the following months sales volume. The accounting team expects this policy will be met at the beginning of the second quarter.
- The target ending inventory for Poseys primary direct material is 20% of the following months production needs. Each completed unit requires five pounds of direct materials at an expected cost of $0.25 per pound. The budgeted production for October is 34,000.
- Poseys pays for 40% of its purchases in the month of purchase and 60% the month after purchase. Total budgeted purchases in June are $20,000.
- Poseys ending cash balance on June 30 was $57,950.
- Poseys non-production cash disbursements are estimated at $80,000 per month.
Posey's Pet Emporium | ||
Budget Data | ||
Budgeted selling price | 4.99 | |
Sales Volume Budgets | ||
June | 33500 | |
July | 32000 | |
August | 35200 | |
September | 35000 | |
October | 34000 | |
Percentage of Sales | ||
Cash sales | [Insert value] | |
Credit collected in | ||
Month of sale | [Insert value] | |
Following month | [Insert value] | |
Uncollectable | [Insert value] | |
FG (finished goods) inventory goal | [Insert value] | following month's sales volume |
Target ending inventory DM (direct materials) | [Insert value] | |
Pounds per completed unit of DM | [Insert value] | |
Expected cost per pound | [Insert value] | |
Percentage of Purchase Payments | ||
Month of purchase | [Insert value] | |
Month after purchase | [Insert value] | |
Budgeted purchases - June | [Insert value] | |
Other cash disbursements per month | [Insert value] | |
Beginning cash balance - July | [Insert value] | |
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