Reference no: EM132773963
ARMICO Corporation has edited the following financial data at December, 31, 2010: Inventories at 31st of dec. :
Direct Materials : 4 400 units Value: 8 800 $
Finished goods : 1 400 units Value: 20 160$
Cash at 31st of dec: 10 200 $
Acounts receivable at 31st of dec: 17 200$
Accounts Payable in january: 5 400$
a. The sales forecast is 2000, 1700, i600 and 1500 units for january, Febuary march and April, respectively, the unit price is $16. all sales are on credits and collections are 40% in the month of sale and 60% the following month. accounts receivable is for credit sales only
b. at the end of each month tool time wants a finished goods inventory equal to 70% of the next month sales and direct materials inventory of 20% of that months production
c. A units of finished product requires 3 pounds of direct material at $2 a pound and 30 minute of direct labour at $7 an hour. Direct material purchases are paid 25% in the month of purchase and 75% in the following month. Account payable is for credit purchases only. all other costs are paid in the month incurred
d. Manufacturing overhead consist of the following: indirect material $0.50 per unit. indirect labour $0.60 per unit. other variable costs $0.40 per unit, salaries $3000 per month, depreciation $1,500 per month and other fixed costs $1,110 per month
e. selling costs are sales commission($0.30 per unit sold )and shipping($0.14 per unit sold) . Administrative costs each month are salaries $800, rent $500 and depreciation $400
f. Total time plans to buy equipment costing $10000 in January
Problem 1) Prepare the operating budgets (sales, production, DM budget, Labor budget, overheads budget (with the calculation of the estimated overhead rate), selling and administrative expenses budget) for the first quarter of 2011 for each month and the quarter in total.
Problem 2) Prepare the income statement
Problem 3) Prepare the cash budget and comment on the company financial Situation
How should the intangible asset be initially recognized
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