Reference no: EM132727581
Question - Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $500,000 starting May 1. The bank would charge interest at the rate of 0.75 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May.
The following information is available:
The company budgeted sales at 650,000 units per month in April, June, and July and at 500,000 units in May. The selling price is $4 per unit.
The inventory of finished goods on April 1 was 162,500 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process.
The inventory of raw materials on April 1 was 45,938 pounds. At the end of each month, the raw materials inventory equals no less than 30 percent of production requirements for the following month. The company purchases materials in quantities of 62,500 pounds per shipment.
Selling expenses are 10 percent of gross sales. Administrative expenses, which include depreciation of $2,500 per month on office furniture and fixtures, total $155,000 per month.
The manufacturing budget for tiles, based on normal production of 500,000 units per month, follows:
Materials (0.25 pound per tile, 125,000 pounds, $4 per pound) $500,000
Labor 410,000
Variable overhead 180,000
Fixed overhead (includes depreciation of $200,000) 380,000
Total $1,470,000
Required -
a-1. Prepare schedules computing inventory budgets by months for production in units for April, May, and June.
a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for April and May.
b. Prepare a projected income statement for May. Cost of goods sold should equal the variable manufacturing cost per unit times the number of units sold plus the total fixed manufacturing cost budgeted for the period. When calculating net sales assume cash discounts of 1 percent and bad debt expense of 0.50 percent.
What the entry to cost of goods sold would have been
: If total overapplied or underapplied overhead is closed to the Cost of Goods Sold account at end of each year, the entry to Cost of Goods Sold would have been
|
What would be the impact of adjustments have on cash
: NSF cheque changed to $875. What would be the impact of these adjustments have on the cash balance as per the bank and books?
|
Risk assessment matrix
: Assessment of the identified risks before risk reduction efforts are applied, using a 5x5 Risk Assessment Matrix.
|
What is the amount of ending inventory
: Chess Top also sold 500 units during the month. Using the average cost method, what is the amount of ending inventory
|
Prepare a projected income statement for May
: Administrative expenses, which include depreciation of $2,500 per month on office furniture and fixtures, Prepare a projected income statement for May
|
Will be any accounts payable at the end of the year
: No payables arise from any other transactions. One months purchases are fully paid in the next month will there be any accounts payable at the end of the year?
|
How the concept of multifactorial etiology
: Describe how the concept of multifactorial etiology relates to the natural history of disease and the different levels of prevention.
|
What is the break-even point in number of passenger flights
: What is the break-even point in number of passenger flights? Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance
|
Final phases of low-mass vs. high-mass stars
: Be sure to include the differences in the final phases of low-mass vs. high-mass stars, and the different kinds of remnants they leave behind.
|