Comprehensive summary problem (Learning Objectives 2 &3) Birdfeeders Unlimited m
ID: 2570583 • Letter: C
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Comprehensive summary problem (Learning Objectives 2 &3) Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home improvement stores for $15 per birdfeeder. Each birdfeeder requires 1.5 board feet of wood, which the company obtains at a cost of $4 per board foot. The company would like to maintain an ending stock of wood equal to 10% of the next month's production requirements. The company would also like to maintain an ending stock of finished birdfeeders equal to 20% of the next month's sales. Sales data for the company is as follows: P9-59A Units October actual sales (prior year) 92,000 November actual sales (prior year) 85,000 December actual sales (prior year) 78,000 January projected sales 80,000 February projected sales 90,000 March projected sales 95,000 April projected sales 105,000 In any given month, 20% of the total sales are cash sales, while the remainder are credit sales. The company's collection history indicates that 80% of credit sales is collected in the month after the sale, 10% is collected two months after the sale, 6% is collected three months after the sale, and the remaining 4% is never collected. Assume that the total cost of direct materials purchases in December was 5550,000. The company pays 45% of its direct materials purchases in the month of purchase and pays the remaining 55% in the month after purchase.Explanation / Answer
Answer 1. Sales Budget Jan Feb Mar Total Sales in Units 80,000 90,000 95,000 265,000 Sp Per Unit 15.00 15.00 15.00 15.00 Total Sales in $ 1,200,000 1,350,000 1,425,000 3,975,000 Cash Sales - 20% 240,000 270,000 285,000 795,000 Credit Sales - 80% 960,000 1,080,000 1,140,000 3,180,000 Answer 4. Schedule of Expected Cash Collections from Sales Jan Feb Mar Total Cash Sales - 20% 240,000 270,000 285,000 795,000 Collection from Accounts Receivables Oct Sales 66,240 - - 66,240 Nov Sales 102,000 61,200 - 163,200 Dec Sales 748,800 93,600 56,160 898,560 Jan Sales - 768,000 96,000 864,000 Feb Sales 864,000 864,000 Mar Sales - - Total cash Collections 1,157,040 1,192,800 1,301,160 3,651,000 Answer 2. Merchandise Production Budget Jan Feb Mar Total Sales In units 80,000 90,000 95,000 265,000 Add: Closing Inventory in units - 20% 18,000 19,000 21,000 21,000 Total Needs 98,000 109,000 116,000 323,000 Less: Beginning Inventory in units (16,000) (18,000) (19,000) (16,000) Required Units Produced 82,000 91,000 97,000 270,000 Answer 3. Direct Material Budget Jan Feb Mar Total Required Units Produced 82,000 91,000 97,000 270,000 Board required per Unit - in feet 1.50 1.50 1.50 1.50 Total Raw Material Required in feet 123,000 136,500 145,500 405,000 Add: Ending Inventory - 10% 13,650 14,550 12,000 12,000 Total Needs 136,650 151,050 157,500 417,000 Less: Beginning Inventory (12,300) (13,650) (14,550) (12,300) Total Raw Material Purchased 124,350 137,400 142,950 404,700 Cost per Feet - Board 4 4 4 4 Cost of Raw Material Purchased 497,400 549,600 571,800 1,618,800 Answer 5. Schedule of Cash payments to Suppliers Jan Feb Mar Total Cash Payment Accounts Payable - Decemeber 302,500 - - 302,500 Jan Purchases 223,830 273,570 - 497,400 Feb Purchases - 247,320 302,280 549,600 Mar Purchases - - 257,310 257,310 Total Cash Payment to Suppliers 526,330 520,890 559,590 1,606,810
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