8. $5,050 9. $505,000 10. %56,250; $5,625 11. $2,541 U 12. $26,520 13. $442 F Us

Question

8. $5,050

9. $505,000

10. %56,250; $5,625

11. $2,541 U

12. $26,520

13. $442 F

Use the following information to answer questions 8 through 10. Keepsake Necklaces makes photo lockets (a type of necklace) that it sells to jewelry retailers like Kay Jewelers. Keepsake made the following sales forecasts for the last half of fiscal year 2013 Sales Dollars 50,000 $312,500 500,000 S375,000 $625,000 $750,000 Month July August nits 2,000 2,500 4,000 3,000 5,000 6,000 October November December Total 812 Keepsake estimates that 75% of its sales are credit sales. Credit collections are estimated as follows. Collected in the month of sale Collected the month following sale Collected two months following sale Never collected 30% 50% 18% 2% 8. Keepsake had adopted lean manufacturing practices, including lean inventory. Its policy is to keep an ending inventory of only 5% of the next month's estimated sales. Compute the number of lockets that Keepsake should produce in November 9. Compute the expected cash collections forN 10. Compute the amount of October sales that will still be uncollected after the end of November. Of this amount, what amount is expected to never be collected? When recording your answer for this question, be sure to record both amounts you have calculated

Explanation / Answer

8. Number of lockets that keepsake will produce in November

   Units sales 5000

Add: Closing inventory[6000(December units)*5% ] 300

less: opening inventory[5000(November units) *5%] 250

5050

9. cash collection for November Month

   In month of November Collection

   75% credit sale *625000 468750 * 30% = 140625   

25% cash sale *625000 156250    296875

For october

75% credit sale* 375000 281250 *50% 140625

For september

75% credit sale * 500000 375000*18% 67500      

   $505000

10. Amount uncollected and never be collected after November

October cash sale 25%* 375000 received = 93750

october credit sale 75% * 375000 = 281250

   percentage of credit sale uncollected after November = 18% after October + 2% never collected

= 20% * $281250

=$56250   

Never collected after November = 2% * $281250

= $5625

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