1. Budgeted Sales by month for the Cheap Book Company are as follows: January $4
ID: 2372104 • Letter: 1
Question
1. Budgeted Sales by month for the Cheap Book Company are as follows:
January $450,000
February $600,000
March $700,000
April $200,000
May $180,000
June $300,000
July $400,000
August $500,000
September $800,000
October $900,000
November $850,000
December $550,000
A review of cash collection history indicates that cash collected in the month of sale amounts to 25 percent of sales, cash collected one month after the sale amounts to 40 percent of sales, cash collected two months after the sale amounts to 30 percent of sales and cash collected three months after the sale amount to 5 percent of sales.
Assuming that the cash receipts budget is based on the above information, please calculate the cash that will be collected in each of the following months:
July:
August:
September:
2. The Good Production Company makes darn good products that cost a lot of money. Based on their production and sales history, their policy is to end the month with 25 percent of their units that they expect to sell in the following month.
Budgeted unit sales for selected months are as follows:
July 600 units
August 820 units
September 900 units
October 1,000 units
Assuming that the company started the month of July with 150 units in beginning inventory, how many units must be produced in each of the following months:
July:
August:
September:
5 yards of fabric at $5 per yard………$25.00
During the prior month the Company made 3,500 dress pants using 18,200 yards of fabric at a total fabric cost of $86,450.
Instructions:
Please compute each of the following:
1. The material price variance
2. The material quantity variance
3. The total material variance
3 hours of labor at $15 per labor hour………..$45.00
During the prior month the Company made 3,500 dress pants using 11,000 hours of labor at a total labor cost of $154,000.
Instructions:
Please compute the following:
1. The labor rate variance
2. The labor efficiency variance
3. The total labor variance
Explanation / Answer
1) cash collection
of july = 400000 * 0.25 + 300000 * 0.40 +180000 * 0.3 +200000 * 0.05 = 374000
of August = 500000 * 0.25 + 400000 * 0.40 + 300000 * 0.3 + 180000 * 0.05 =384000
of sepetember = 800000 * 0.25 + 500000 * 0.40 + 400000 * 0.30 + 300000 * 0.05 = 535000
2)
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