The Volt Battery Company has forecast its sales in units as follows: Volt Batter

Question

The Volt Battery Company has forecast its sales in units as follows:

   

   

Volt Battery always keeps an ending inventory equal to 140% of the next month’s expected sales. The ending inventory for December (January’s beginning inventory) is 2,240 units, which is consistent with this policy.

      Materials cost $11 per unit and are paid for in the month after purchase. Labor cost is $4 per unit and is paid in the month the cost is incurred. Overhead costs are $10,000 per month. Interest of $8,800 is scheduled to be paid in March, and employee bonuses of $14,000 will be paid in June.

   

    

Prepare a monthly summary of cash payments for January through June. Volt produced 1,400 units in December.

The Volt Battery Company has forecast its sales in units as follows:

Explanation / Answer

a) Production Schedule:

b) Summary Of Cash Payments:

Jan Feb Mar Apr May June July Projected Unit Sales 1600 1450 1400 1900 2150 2300 2000 Desired Ending Inventory 2030 1960 2660 3010 3220 2800 Total Units required 3630 3410 4060 4910 5370 5100 Less: Beginning Inventory -2240 -2030 -1960 -2660 -3010 -3220 Units to be produced 1390 1380 2100 2250 2360 1880

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