1. Mountaineers sells its rock-climbing shoes worldwide. Mountaineers expects to
ID: 2480701 • Letter: 1
Question
1. Mountaineers sells its rock-climbing shoes worldwide. Mountaineers expects to sell 4,000 pairs of shoes for $165 each in January, and 2,000 pairs of shoes for $220 each in February. All sales are cash only.
Prepare the sales budget for January and February.
2. Review your results from exercise 3. Mountaineers expects cost of goods sold to average 75% of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240 each. Mountaineers’ target ending inventory is $18,000 plus 45% of the next month’s cost of goods sold.
Review your results from exercise 3. Mountaineers expects cost of goods sold to average 75% of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for $240 each. Mountaineers’ target ending inventory is $18,000 plus 45% of the next month’s cost of goods sold.
Requirement
R1. Use this information and the sales budget prepared in S21-3 to prepare Mountaineers’ inventory, purchases, and cost of goods sold budget for January and February.
3. Refer to the Mountaineers’ sales budget that you prepared in exercise 3. Now assume that Mountaineers’ sales are 20% cash and 80% on credit. Mountaineers’ collection history indicates that credit sales are collected as follows:
November sales totaled $386,000 and December sales were $399,500.
Requirement
Prepare a schedule for the budgeted cash collections for January and February.
Explanation / Answer
1) Sales Budget January February Pairs of shoes 4000 2000 selling price 165 220 Sales revenue 660000 440000 2) Cost of sales Budget January February March Sales revenue 660000 440000 1104000 Cost of sales - 75% of sales revenue 495000 330000 828000 Inventory - Budget January February Sales revenue 660000 440000 ending inventory 166500 390600 Purchase Budget January February Sales for the month 660000 440000 Add :ending inventory desired 166500 390600 Less : opening inventory 240750 166500 Purchase Budget 585750 664100 3) Budgeted Cash Collection November December January February Sales revenue 386000 399500 660000 440000 Cash sales - 20% (A) 77200 79900 132000 88000 Credit sales 308800 319600 528000 352000 November sales 92640 185280 22372 December sales 95880 191760 22372 January sales 158400 316800 February sales 105600 Total credit sales collection (B) 92640 281160 372532 444772 Total cash collection ( A + B) 169840 361060 504532 532772
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.