Answer:
Instructions are listed below.
Explanation:
Giving the following information:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted unit sales 12,500 13,500 15,500 14,500 The selling price of the company’s product is $24 per unit.
A) Sales budget:
Total units= 56,000 units
Total sales= 56,000*24= 1,344,000
Q1= 12,500*24= $300,000
Q2= 13,500*24= $324,000
Q3= 15,500*24= $372,000
Q4= 14,500*24= $348,000
B)
Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $73,200.
Cash collections:
1st quarter:
Sales= 300,000*0.75= 225,000
From last year= 73,200
Total= 298,200
2nd Q:
Sales= 324,000*0.75= 243,000
From 1st Q= (300,000*0.2)= 60,000
Total= 303,000
3rd Q:
Sales= 372,000*0.75= 279,000
From 2nd Q= (324,000*0.2)= 64,800
Total= 343,800
4th Q:
Sales= 348,000*0.75= 261,000
From 3rd Q= (372,000*0.2)= 74,400
Total= 335,400
C) The company expects to start the first quarter with 2,500 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,700 units
Production:
1Q:
Sales= 12,500
Ending inventory= (13,500*0.2)= 2,700
Beginning inventory= (2,500)
Total= 12,700
2Q:
Sales= 13,500
Ending inventory= (15,500*0.2)= 3,100
Beginning inventory= (2,700)
Total= 13,900
3Q:
Sales= 15,500
Ending inventory= (14,500*0.2)= 2,900
Beginning inventory= (3,100)
Total= 15,300
4Q:
Sales= 14,500
Ending inventory= 2,700
Beginning inventory= (2,900)
Total= 14,300
