Choo Co. Budgeted sales Budgeted direct materials Month Units Beg. raw materials
ID: 2474608 • Letter: C
Question
Choo Co.
Budgeted sales
Budgeted direct materials
Month
Units
Beg. raw materials in lbs.
12,420
June
9,000
Lbs. needed per unit
5
July
7,000
End. inv. of raw materials in
August
9,000
terms of next month's demand
30%
September
15,000
Cost of materials per lb.
$ 3
October
28,000
Beg. bal. of accts. payable
$ 260,960
November
12,000
Materials are paid for in the following month
Selling price per unit
$ 90
Budgeted direct labor
Beg. balance of accts. rec.
$ 158,000
Hours required per unit
4
Direct labor cost per hour
$10
Cash collection pattern
Wages are always paid in the same month
Month of sale
60%
Month following sale
40%
Budgeted overhead
Variable overhead per unit
$ 3.00
Budgeted production
Fixed overhead per month
$ 3,000
End. inv. of finished goods in
Depreciation portion of FOH
$ 1,000
terms of next month's sales
25%
All OH is paid for in the same month
Beg. inv. of finished goods
2,400
Budgeted cash flow
Budgeted selling and administrative costs
June 30 cash balance
$ 46,000
Variable S&A per unit sold
$ 4
Minimum cash balance
$ 20,000
Fixed S&A per month
$ 3,500
Monthly interest on borrowing
2.0%
All S&A is paid for in the same month
Ending cash balance must exceed $20,000
Borrowing must be in even increments of $1000
Repayments made when cash is available;
See text for interest calculation rules
Choo Co.
Budgeted sales
Budgeted direct materials
Month
Units
Beg. raw materials in lbs.
12,420
June
9,000
Lbs. needed per unit
5
July
7,000
End. inv. of raw materials in
August
9,000
terms of next month's demand
30%
September
15,000
Cost of materials per lb.
$ 3
October
28,000
Beg. bal. of accts. payable
$ 260,960
November
12,000
Materials are paid for in the following month
Selling price per unit
$ 90
Budgeted direct labor
Beg. balance of accts. rec.
$ 158,000
Hours required per unit
4
Direct labor cost per hour
$10
Cash collection pattern
Wages are always paid in the same month
Month of sale
60%
Month following sale
40%
Budgeted overhead
Variable overhead per unit
$ 3.00
Budgeted production
Fixed overhead per month
$ 3,000
End. inv. of finished goods in
Depreciation portion of FOH
$ 1,000
terms of next month's sales
25%
All OH is paid for in the same month
Beg. inv. of finished goods
2,400
Budgeted cash flow
Budgeted selling and administrative costs
June 30 cash balance
$ 46,000
Variable S&A per unit sold
$ 4
Minimum cash balance
$ 20,000
Fixed S&A per month
$ 3,500
Monthly interest on borrowing
2.0%
All S&A is paid for in the same month
Ending cash balance must exceed $20,000
Borrowing must be in even increments of $1000
Repayments made when cash is available;
See text for interest calculation rules
Explanation / Answer
Check the tables and the explanation below that for details.
Total Sales = Units Sold * Unit Price
Collections and A/R:
A/R table is as follows
June Sales = 9000 * 90 = 810,000
June Collections = 60% * 810,000 = 486,000
So June Sales collected in July = 810,000 - 486,000 = 324,000
Similarly, in July
Sales = 7000 * 90 = 630,000
July Sales Collections = 60% * 630,000 = 378,000
June Sales Collections = 324,000 (As calculated above)
July Sales collected in August = 630,000 - 378,000 = 252,000
Similarly calculate for the other 2 months.
So in July, Account receivables = Beginning A/R + Additions in A/R - Collections from A/R
= 158,000 + 252,000 - 324,000
Similarly in August = 86,000 + 324,000 - 252,000 = 158,000
Similarly in September = 158,000 + 540,000 - 324,000 = 374,000
Similarly in Quarter = 158,000 + 1,116,000 - 900,000 = 374,000
Please ask the remaining questions in another question. Thanks.
Sales Budget July August September Quarter Sales - Units 7,000.00 9,000.00 15,000.00 31,000.00 Price / Unit 90.00 90.00 90.00 90.00 Total Sales 630,000.00 810,000.00 1,350,000.00 2,790,000.00Related Questions
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