TIME SENSITIVE Soprano Co. is in the process of preparing the second quarter bud

Question

TIME SENSITIVE

Soprano Co. is in the process of preparing the second quarter budget for 2010, and the following data have been assembled:

The company sells a single product at a selling price of $45 per unit. The estimated sales volume for the next six months is as follows:

All sales are on account. The company's collection experience has been that 44% of a month's sales are collected in the month of sale, 53% are collected in the month following the sale, and 3% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $145,485 on March 31, 2010.

Management's policy is to maintain ending finished goods inventory each month at a level equal to 54% of the next month's budgeted sales. The finished goods inventory on March 31, 2010, is expected to be 3,942 units.

To make one unit of finished product, 4 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 44% of the next month's estimated usage. The raw materials inventory is expected to be 15,794 pounds on March 31, 2010.

The cost per pound of raw material is $6.00, and 71% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable balance for raw material purchases is expected to be $53,783 on March 31, 2010.

Prepare a sales budget in units and dollars, by month and in total, for the second quarter (April, May, and June) of 2010.(Omit the "$" sign in your response.)

Prepare a schedule of cash collections from sales, by month and in total, for the second quarter of 2010. (Omit the "$" sign in your response.)

TIME SENSITIVE

Soprano Co. is in the process of preparing the second quarter budget for 2010, and the following data have been assembled:

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Part B:

Thanks.

April May June Total EXPECTED SALES UNIT 7300 10400 8100 25800 Selling price per unit 45 45 45 45 TOTAL SALES 328500 468000 364500 1161000

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