Question

The company PR Products Corp. estimates that its quarterly sales for the next year are as follows: (units) The price per unit is $ 70

1. 1 Quarter 30,000 units

2. 2 Quarter 50,000

3. 3 Quarter 60,000

4. 4 Quarter 40,000

Accounts receivable as of December 31 are $ 90,000. The company estimates that sales are charged 60% in the quarter they are made and 40% in the following quarter.

Finished Goods' desired ending inventory represents 20% of next or next quarter unit sales. Finished Goods starting inventory is 6,000 units.

3 pounds of Raw Material per unit is required for the production required. Raw Material's desired inventory is 10% of the required production for the next quarter. Raw Material's initial inventory is 12,000 units. The cost of Raw Material is $ 1.00 per pound.

Accounts payable on 12/31 / X0 total $ 60,000. Payments for Raw Material purchases are made at the rate of 70% in the quarter of purchase and the other 30% in the following quarter.

The invested time of direct labor per unit is 1.5 hour. The hourly direct labor cost is $ 20.00.

Expected Cash Collections

	T1	T2	T3	T4	Year
Account Receivables 12/31/X0
Total Cash Collections	$	$	$	$	$

Production Budget

	T1	T2	T3	T4	Year
Expected sales
Desired ending inventory				8,500
Total needs
Beginning inventory
Units to be produced

Direct Material Budget

	T1	T2	T3	T4	Year
Units to be produced
RM needed per unit (libras)
Production needs
Desired ending inventory of RM				4,500
Total needs
Beginning inventory of RM
RM to be purchased
Cost of RM per pound
Cost of RM to be purchased	$	$	$	$	$

Answer 1

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