Buug the year e. A cost of goods sold An ending finished goods inventory budget
ID: 2564632 • Letter: B
Question
Buug the year e. A cost of goods sold An ending finished goods inventory budget for e for a finished can of seltzerg brice, g. If the company consders its cost of goods sold to bo price does the company have to charge for a finished cansales killers for commec wn applications. The company needs to watch its cash carefulvy kers that it can survive the busy summer months when there is uct, requiring large inventories. Unfortunately, not all of Once On away, so the company ends up floating receivables at its busiest tim stomers rating solid, however, once Only pays all of its bills monthly. That mea0 keep tr 6. CASH BUDGETS. Once Only produces various kinds watch its cash carefully in order a huge demand for the pro its thee each month, it still owes half of the inventory purchases to its supplier or goods recef after the 15th of the month. The information pertaining to Once Only's ca months of July through September is: Opening cash balance on July 1 is $25,000. · Sales of fertilizer were: May: $125,000 » June: $175,000 » July: $250,000 » August: $200,000 September: $300,000 It projects sales in October of $250,000. . Once Only's customers pay in the following way: 25% pay in the month of · purchase, 50% pay the month following purchase, and the remaining 25% pay two months after purchase. The materials costs are 50% of the total sales price for each month. · The com pany likes to keep 25% of its next month · s sales on hand at the end of each month. It started the quarter with 25% of July's needs on hand. .Direct labor costs are $18,000 per month. Overhead for the warehouse is $30,500 per month. · Back office workers earn $27,500 per month. .Explanation / Answer
Budgets are the forecasts that are prepared on monthly or on periodic basis of the future expected figures and is based on the past experience of the management
Part a:
Particulars
May
June
July
August
Sepetmber
October
Sale for each month
1,25,000.00
1,75,000.00
2,50,000.00
2,00,000.00
3,00,000.00
2,50,000.00
Direct materials production budget:
Raw materials required for production
62,500.00
87,500.00
1,25,000.00
1,00,000.00
1,50,000.00
1,25,000.00
(50% of next months sale)
50%*175000
50%*250000
50%*200000
50%*300000
50%*250000
Add: planned ending inventory balance
43,750.00
62,500.00
50,000.00
75,000.00
62,500.00
(25% of noext months sale)
25%*175000
25%*250000
25%*200000
25%*300000
25%*250000
Raw material required in hand
1,06,250.00
1,50,000.00
1,75,000.00
1,75,000.00
2,12,500.00
(Raw material required for production+planned ending inventory)
Less: opening raw material inventory
43,750.00
75,000.00
62,500.00
25%*25000
25%*200000
25%*300000
Direct materials production budget
1,06,250.00
1,06,250.00
1,00,000.00
1,12,500.00
2,12,500.00
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Part b:
Particulars
May
June
July
August
Sepetmber
October
Sale for each month
1,25,000.00
1,75,000.00
2,50,000.00
2,00,000.00
3,00,000.00
2,50,000.00
Cash receipts:
Opening balance
25,000.00
Sales:
May
31,250.00
25%*125000
62,500.00
50%*125000
31,250.00
25%*125000
June
43,750.00
25%*175000
87,500.00
50%*175000
43,750.00
25%*175000
July
62,500.00
25%*250000
1,25,000.00
50%*250000
62,500.00
25%*250000
August
50,000.00
25%*200000
1,00,000.00
50%*200000
50,000.00
25%*200000
September
75,000.00
25%*300000
1,50,000.00
50%*300000
October
62,500.00
25%*300000
Total cash receipts
31,250.00
1,06,250.00
2,06,250.00
2,18,750.00
2,37,500.00
2,62,500.00
PS:
Amounts in Bold are workings of the figures above them
Part c:
Cash payments:
Direct material purchase budget
1,06,250.00
1,06,250.00
1,00,000.00
1,12,500.00
2,12,500.00
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Direct material
53,125.00
53,125.00
50,000.00
56,250.00
1,06,250.00
(Suppliers are paid 50% in the month)
50%*106250
50%*106250
50%*100000
50%*112500
50%*212500
Direct labour costs
18,000.00
18,000.00
18,000.00
18,000.00
18,000.00
(Given in question)
Overheads
30,500.00
30,500.00
30,500.00
30,500.00
30,500.00
(Given in question)
Back office expenses
27,500.00
27,500.00
27,500.00
27,500.00
27,500.00
(Given in question)
Total cash payments
1,29,125.00
1,29,125.00
1,26,000.00
1,32,250.00
1,82,250.00
(Given in question)
Part d:
Budgets are the forecasts that are prepared on monthly or on periodic basis of the future expected figures and is based on the past experience of the management
Part a:
Particulars
May
June
July
August
Sepetmber
October
Sale for each month
1,25,000.00
1,75,000.00
2,50,000.00
2,00,000.00
3,00,000.00
2,50,000.00
Direct materials production budget:
Raw materials required for production
62,500.00
87,500.00
1,25,000.00
1,00,000.00
1,50,000.00
1,25,000.00
(50% of next months sale)
50%*175000
50%*250000
50%*200000
50%*300000
50%*250000
Add: planned ending inventory balance
43,750.00
62,500.00
50,000.00
75,000.00
62,500.00
(25% of noext months sale)
25%*175000
25%*250000
25%*200000
25%*300000
25%*250000
Raw material required in hand
1,06,250.00
1,50,000.00
1,75,000.00
1,75,000.00
2,12,500.00
(Raw material required for production+planned ending inventory)
Less: opening raw material inventory
43,750.00
75,000.00
62,500.00
25%*25000
25%*200000
25%*300000
Direct materials production budget
1,06,250.00
1,06,250.00
1,00,000.00
1,12,500.00
2,12,500.00
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