7. $1,567,200 8. $1,036,800 9. 35,600 Use the following information to answer qu

Question

7. $1,567,200

8. $1,036,800

9. 35,600

Use the following information to answer questions 7 through 9. Outback Living Company manufactures outdoor barbeque grills. It sells most of its grills to retailers like WalMart and Costco. Outback made the following forecasts for the upcoming six months. Sales Month January February March April May June Units 10,000 Dollars $600,000 6,000.$960,000 $1,440,000 $2,100,000 $2,460,000 24,000 35,000 41,000 Total 55.000 9300,000 Sales Mix Cash Credit 20% 80% Credit Sales Collection Pattern Collected in the month of sale Collected the month following sale Never collected 10% 85% 5% 7. Compute the expected cash collections for April. 8. Compute the amount of March sales that will still be uncollected at the beginning of April. According to Outback's inventory policy, it must maintain an ending finished goods inventory equal to 10% of the next period's sales. Compute the number of rlsit should produce in April

Explanation / Answer

7. Expected Cash collection for April = Cash Sales in April + 10% of cedit sales collected in April +85% of March credit sales collected in April

= 420000 + (10% of 1680000 + 85% of 1152000)

= $1567200

8. Computation of March sales still uncollected in begining of April = 90% of credit sales in March

as 85% is to be collected in April and 5% would remain uncollected

Uncollected sales of March = 90% of 1152000 = $1036800

9. Number of grills to be produced in April = Sales + Ending Inventory - Opening Inventory

= 35000 + (10% 0f 41000)-(10% of 35000)

= 35600 units

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