slove only 4!!!!!!plz The selling price per unit is $40.00 December of the previ
ID: 2481061 • Letter: S
Question
slove only 4!!!!!!plz
The selling price per unit is $40.00
December of the previous year 10,000
January 40,000
February 60,000
March 100,000
April 70,000
2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only sells one product that can be purchased at $15.00 per unit. The market for this product is very competitive and customers highly value service such as quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 50% of next month’s projected sales.
3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $50,000.00, and this was the balance in the cash account on January 1. Past experience shows that 30% of sales are collected in the month of the sale, and 70% in the month following the sale. Labor cost is $15 per unit. Other expenses include $17,000 per month for rent, $4,000 for advertising, and $6,000 per month for depreciation. All costs are paid in the current month except inventory purchases, which are paid in the month following purchase (i.e. January purchases are paid in February). On January 1st there was an outstanding accounts payable balance of $100,000. The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month and repayments are made at the end, and interest is only paid at the time when repayment is made. Additionally, all loans and repayments (not the interest portion) can only be made in increments of $1000 and the company would like to pay its debts, or a portion thereof, as soon as it has enough cash to do so.
4. Prepare the Budgeted Income Statement based on the information given above.
Label this budget scenario as A.,
Explanation / Answer
Answer:4
Budgeted income statement Particulars Ist quarter Sales 8000000 Less: Material cost 3000000 Labor cost 3000000 Rent 51000 Advertising 12000 Dep 18000 Interest cost 8430 Net income 1910570Related Questions
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