Problem 4 (15 points): Fedor, Inc. has prepared the following Sales Budget for A

Question

Problem 4 (15 points): Fedor, Inc. has prepared the following Sales Budget for August October: Based on prior collected in the month of the sale 50% are collected the following month, 28% are experience: 1)Allsales a re on account; 2) 20% of sales are collected the next month, 2% are non-collectable. 1.5 Budgeted Sales onth $68,000 79,500 78,700 77,800 70,20 une ul eptember ctober Prepare a Cash Collection Budget for August, September and October. Problem 5 (10 points): Briny Sail Makers manufactures sails for sailboats. The company has the capacity to produce 50,000 sails per year and is currently producing and selling 30,000 sails r year. The following information relates to current production: $17 les price per unit ariable costs per unit: Manufacturing Selling and administrative $6 $2 Total fixed costs: $675,000 Manufacturing Selling and administrative $300,000 If a special pricing order is accepted for 5,500 sails at a sales price of $160 per unit, if the order requires no variable or fixed selling and administrative costs, what is the effect on operating income?

Explanation / Answer

Problem 4

Cash Collections Budget

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Problem 5

Relavent cost per unit = Variable manufacturing cost per unit = 62

Sales price per unit = 160

Units = 5,500

Effect on operating income = (160 - 62) * 5,500 units

= 539,000

Effect on operating income = Operating income Increases by 539,000

August September October Cash collected in the month of sale 15,740 (78,700*20%) 15,560 (77,800*20%) 14,040 (70,200*20%) Cash collected in the month following the sale 39,750 (79,500*50%) 39,350 (78,700*50%) 38,900 (77,800*50%) Cash collected in the second month following the sale 19,040 (68,000*28%) 22,260 (79,500*28%) 22,036 (78,700*28%) Budgeted cash collections 74,530 77,170 74,976

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