The master budget components for land company for the month

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Reference no: EM13572484

The master budget components for Land Company for the month ended June 30 appear below. Land Company produces and sells rakes for $10 each. Budgeted sales and cash disbursements for the next five months are:

	Budgeted sales	Budgeted cash disbursements
April	20,000 units	$301,000
May	50,000 units	$362,000
June	30,000 units	$356,000
July	25,000 units	$332,000
August	15,000 units	$315,000

Additional information follows:

All sales are on account. The company's collection pattern is: 70% collected in the month of sale; 25% collected in the month following sale; and the remaining 5% are collected in the next month.
The accounts receivable balance on March 31 was $30,000.
Land's loan arrangement with its bank requires Land to maintain a minimum cash balance of $10,000. The cash balance at the beginning of June was $40,000.
Land desires to have enough rakes on hand at the end of each month equal to 20 percent of the following month's budgeted rake sales.
Five pounds of aluminum are required to produce each rake.
The company desires to have enough aluminum on hand at the end of each month equal to 10 percent of the following month's production needs.
Aluminum costs $0.40 per pound.
Each rake produced requires 6 minutes of direct labor.
Employees are paid $12 per hour. In addition, the cost of fringe benefits is $2.50 per hour.
MOH is applied at the rate of $0.60 per direct labor dollar.

Reference no: EM13572484

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