Reference no: EM132836462
ACC 1103 Managerial Accounting - Higher Colleges of Technology
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Version 1
Part I
The data below pertains to the first quarter of Alpha Company which manufactures toys.
Below is the estimated sales (in units):
| January |
50,000 |
| February |
70,000 |
| March |
60,000 |
| April |
40,000 |
| May |
30,000 |
| June |
20,000 |
The selling price of the toy is $15 per unit.
All sales are on account.
Based on past experience, sales are collected in the following pattern:
| Month of sale |
30% |
| Month following sale |
65% |
| Uncollectible |
5% |
Sales for December of last year totaled $300,000.
The company maintains finished goods inventories equal to 20% of the following month's sales. This requirement will be met at the end of December of the previous year.
Each toy requires 5 pounds of raw materials.
The company requires that the ending inventory of raw materials be equal to 30% of the following month's production needs.
The raw material costs $1.20 per pound.
40% of a month's purchases of raw materials is paid for in the month of purchase; the remainder is paid for in the following month.
The accounts payable on December 31 of last year was $76,000.
Required for Part I
Prepare:
Prepare a sales budget, by month and in total, for the quarter.
Prepare a schedule of expected cash collections, by month and in total, for the quarter.
Prepare a production budget for each months of the quarter.
Prepare a direct materials budget, by month and in total, for the quarter.
Prepare a schedule of expected cash disbursements, by month and in total, for the quarter.
Part II
Question One
Beta Inc. is a wholesale distributor of beach umbrellas. Thus, peak sales occur in May of each year as shown in the company's sales budget for the second quarter, given below:
April May June
Budgeted Sales (All on account) $ 600,000 $ 800,000 $ 550,000
From past experience, the company has learned that 30% of a month's sales are collected in the month of sale, 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. February sales totaled $400,000, and March sales totaled $500,000.
Required:
Prepare a schedule of expected cash collections from sales for each month (April, May, and June). (15 marks)
Question Two
Salam company is planning its cash needs for the fourth quarter.
The following information has been assembled to assist in preparing a cash budget for the quarter:
The Total cash collections and disbursement for purchases are as follows (All amounts are in dollars):
Oct Nov Dec
Total Cash collection 46,500 49,760 59,600
Total Cash disbursement for Purchases 36,000 36,750 30,375
Selling and administrative expenses will be incurred as follows:
Selling expenses 7,200 11,700 8,000
Administrative expenses 5,600 7,200 6,100
Land costing $4,500 will be purchased in October.
Dividends of $1,000 will be declared and paid in November.
The cash balance on October 1st is $10,000.
The company must maintain a cash balance of at least $15,000 at the end of each month.
The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 12% per year. The company would repay the loan plus accumulated interest at the end of the quarter.
Required:
Prepare:
1. A cash budget
Attachment:- Project report.rar