8 Sevenbergen Corporation makes one product and has provided the following infor

Question

8 Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit Budgeted unit sales (all on credit): $ 92 July August September October 9,000 11,300 10,400 10,800 Skipped Raw materials requirement per unit of output Raw materials cost Direct labor requirement per unit of output 4 pounds $ 1.00 per pound 2.8 direct labor-hours per direct labor- hour Direct labor wage rate 22.00 Variable selling and administrative expense $ 1.50 per unit sold Fixed selling and administrative expense 70,000 per month Credit sales are collected: 40% in the month of the sale 60% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production nee The expected cash collections for August is closest to:

Explanation / Answer

Answer is A. $912,640

Cash collected from July sales (9,000*$92*60%) $ 496,800 Cash collected from August sales (11,300*$92*40%) $ 415,840 Total cash collection in August $ 912,640

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