The following information pertains to Finn Corporat Month 1,500 $30,000 34,000 3
ID: 2572752 • Letter: T
Question
The following information pertains to Finn Corporat Month 1,500 $30,000 34,000 38,000 42,000 48,000 60,000 60,750 52,000 45,000 41,600 30,000 32,200 August September October November 1,700 1,900 1,680 1,920 2,400 2,250 2,000 1,800 1,600 1,500 1,400 January February March April May June of sales, 25% are in cash with the remainder on account. Accounts Receivable is collected from customers in the following manner: Month of sale 30% Month following sale 50% second month following sale 20% s to be 30% of next month's sales. Finn Corporation desires g inventory tor Each unit requires three pounds of material cach pound costs $0.73, Finn Corporation desires ending inventory of raw materials should be 50% of next month's needs plus 200 pounds. Materials are purchased on account. Payments are 60% in the month of sale with the remainder paid in the following month. The previous month's balance was $1625. In addition, each unit requires three hours of labor, each labor hour costs $12.50. Prepare a Revenue budget for February, including revenue, cash collections, and accounts receivable. Prepare a Production Budget for February. Prepare a aw Materials Purchases Budget for February, including.cash disbursements and accounts payable. Prepare the Direct Labor Budget including payments. REQUIRED: 1. 2. 3. 4.Explanation / Answer
Req 1: Revenue budget for the month of Feb: Sales uniTs 2000 units Budgeted Sales revenue $52,000 Cash collections in the month of Feb: Cash collections from cash sales of Feb (52000*25%) 13000 Cash collections from Credit sales of Feb (52000*75%*30%) 11700 Cash collections from Credit sales of Jan(60750*75%*50%) 22781.25 Cash collections from Credit sales of Dec (60000*75%*20%) 9000 TOTAL CASH COLLECTIONS 56481.25 Accounts receivable at the end of Feb: Receivable for Feb sales (52000*75%*70%) 27300 Receivables from Jan sales(60750*75%*20%) 9112.5 Accounts receivable at the end of Feb: 36412.5 Req 2: production budget for Feb Jan Feb March Sales units budgeted 2250 2000 1800 Add: Desired closing inventory 600 540 480 (30% of next month sales i.e. 1800) Less: Desired Opening inventory 675 600 540 (30% of current month sales i.e. 2000) Budgeted production units 2175 1940 1740 Req 3: Raw material purchase Jan Feb Budgeted Production units 2175 1940 Material required per unit 3 3 Total requirement of Material 6525 5820 Add: Desired Closing Inventory 3110 2810 (50% of next requirement +200) Less: Opening inventory 3462.5 3110 (50% of current month+200) Raw material purchase units 6172.5 5520 Material cost per unit 0.75 0.75 Raw material budget in $ 4629.375 4140 Cash disbursement for Feb: Cash payment for Feb month (4140*60%) 2484 Cash payment for Jan month (4629.375*40%) 1851.75 Total cash disbursals in Feb 4335.75 Accounts payable for Feb: Payable for Feb purchases(4140*40%) 1656 Req 4: Labour cost budget Production units of Feb 1940 Labour horus required per unit 3 Total labour hours required 5820 labour cost per hour 12.5 Budgeted labour cost for Feb 72750
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