What is the solution to this problem? Bombs Away Video Games Corporation has for

Question

What is the solution to this problem?

Bombs Away Video Games Corporation has forecasted the following monthly sales:

Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.

Of each month's sales, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made.

a.Construct a monthly production and inventory schedule in units. Beginning inventory in January is 24,000 units.

b.Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.

c.Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $44,000 per month.

d.Prepare a monthly cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $5,000, which is also the minimum desired. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.)

  January $ 99,000   July $ 44,000   February 92,000   August 44,000   March 24,000   September 54,000   April 24,000   October 84,000   May 19,000   November 104,000   June 34,000   December 122,000 Total annual sales = $744,000

Explanation / Answer

a.

Step-1- Calculation of MOnthly Productions:

Step-2-

Calculation Of sales Unit- Monthwise

Step-3: Calculation of Production and Inventory in Units -Monthwise

b.

c.

Total Sales $ 7,44,000 Sales Price Per Unit $ 5 Total Sales(annual) Unit 148800 Monthly Production Unit 12400 (Because Question Specifies that monthly Equal sales will be the monthly Productions.

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