Wichita Industries\' sales are 20% cash and 80% on credit. Credit sales are coll

Question

Wichita Industries' sales are 20% cash and 80% on credit. Credit sales are collected as follows: 40% in the month of sale, 50% in the next month, and 10% in the following month. On December 31, the accounts receivable balance includes $13,000 from November sales and $42,000 from December sales. Assume that total sales for January are budgeted to be $51,000. What are the expected cash receipts for January from the current and past sales?

a. 26,520

b. 60,520

c. 62,820

d. 64,320

e. 74,520

Alliance Company’s budgets production of 28,000 units in January and 32,000 units in the February. Each finished unit requires 3 pounds of raw material K that costs $2.00 per pound. Each month’s ending raw materials inventory should equal 40% of the following month’s budgeted materials. The January 1 inventory for this material is 33,600 pounds. What is the budgeted materials cost for January

a. 168,000

b. 244,800

c. 177,600

d. 100,800

e. 144,000

Explanation / Answer

1 January Cash sales 10200 =51000*20% Credit sales: November 13000 December 35000 =42000/60*50 January 16320 =51000*80%*40% Total cash collections 74520 Option E is correct 2 Required production 28000 Materials per unit 3 Total materials 84000 Add: Ending inventory 38400 Less: Beginning inventory 33600 Total materials to be purchased 88800 Cost per pound 2 Budgeted materials cost 177600 Option C is correct

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