Production cash outflow. California Cement Company produces its products two mon

Question

Production cash outflow. California Cement Company produces its products two months in advance of anticipated sales and ships to warehouse centers the month before sale. The inventory safety stock is 20% of the anticipated month's sale. Beginning inventory in September 2014 was 32,472 units. Each unit costs S2.82. The average sales price per unit is $572. The cost is made up of 34% labor, 56% materials, and 10% shipping to the warehouse). The company pays or labor the month of production, shipping the month after production, and raw materials the month prior to production. What is the production cash outflow for products produced in the month of September 2014, and in what months does it occur? Note: September production is based on November anticipated sales. The following are the fourth-quarter sales for 2014: $1,752,000 (October), $1,624,000 (November), and $2,133,000 (December). What is the production cash outflow for the month of September 2014 production? The labor cost is S (Round to the nearest dollar) The raw materials cost is S (Round to the nearest dollar) The shipping cost is$ (Round to the nearest dollar) In what months does the production cash outflow for the month of September 2014 production occur? The production cash outflow for the month of September 2014 production is as follows: (Select the best response. Due to rounding, numbers below might differ from your original answers a few dollar units) A. August labor, $295528; September for raw materials, $486,752 October for shipping, S86.920. August for raw materials, $486,752 September for labor, $295528; October for shipping, $86,920. B. O C. August for shipping, $86,920; September raw materials, $486,752; October for labor, $295,528. D. August for raw materials, S486752 September for shipping, S86,920: October for labor, $295,528. Click to select your answerls).

Explanation / Answer

Production for the Month of september November sales in units ($1624,000/$5.72) 283916 Add: Closing Stock (20%*283916) 56783 Requirement 340699 Less: Opening Stock 32472 308227 2.82 The Labour Cost = 308227*$2.82*34% =$295,528 The material cost =308,227*$2.82*56% =$486,752 The shipping cost =308227*$2.82*10%=$86920 2 The Production cash outflows for the month of September 2014 Production cost Answer is Option (B) August Raw materials $486,752,   September labour cost $295,528, October shipping cost $86920 Month Cost labour cost = in the month of Production September $295528 materials , One month Prior to Production August $486752 Shipping Cost , Month After Production October $86920

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