Reference no: EM133026336

Question - The Ace Battery Company has forecast its sales in units as follows:

January 1,300, May 1,850

February 1,150, June 2,000

March 1,100, July 1,700

April 1,600

Ace always keeps an ending inventory equal to 110 percent of the next month's expected sales. The ending inventory for December (January's beginning inventory) is 1,430 units, which is consistent with this policy.

Materials cost $14 per unit and are paid for in the month after production. Labour cost is $7 per unit and is paid in the month the cost is incurred. Overhead costs are $8,500 per month. Interest of $8,500 is scheduled to be paid in March, and employee bonuses of $13,700 will be paid in June.

Required -

a. Prepare a monthly production schedule for January through June.

b. Prepare a monthly summary of cash payments for January through June. Ace produced 1,100 units in December.