Question

name: ___________________________________________________________

1. Roberts has budgeted production for next year as follows:

	Quarter
	First	Second	Third	Fourth
Budgeted unit sales	9,000	11,000	12,000	14,000

Sales for each quarter of 2020 are listed above for a manufacturing business. The ending finished goods requirement is 10% of the following month’s sales. Four pounds of raw materials are required for each unit produced. The raw materials inventory at the end of each quarter should equal 30% of the next quarter's production needs. The cost of each pound of raw materials is $15. Beginning inventories for both finished goods and raw materials met the requirements.

______________________ What are budgeted purchases of raw materials in the second quarter? Prepare the production budgets for the second and third quarter, and show the start of the fourth quarter below.

                                                    Second Qtr                               Third Qtr                       Start the Fourth Qtr

$_____________________ What is the cost of the budgeted raw material purchases for the second quarter?

Prepare the Direct Materials budget below to show your work for the answers above.

                                                    Second Qtr                               Start the Third Qtr

2. Roberts Corporation makes one product and has provided the following information to help prepare the master budget.                                                                                                                    Show your work below:

Budgeted unit sales, February		10,700	units
Variable selling and administrative expense	$	$2.00	per unit sold
Fixed selling and administrative expense bills received	$	$60,000	per month

Depreciation on the delivery trucks per month                                                          $1,000

a. What are the total estimated selling and administrative expense for February?    ________________

b. If all cash expenditures for selling and administrative expenses are paid in the month incurred, how much will be
  
    shown on the cash budget for selling and administrative expenses for the month?     _____________

3. ABC Company is preparing their master budget and is preparing a schedule of expected cash collections from sales for the first quarter of 2020. They expect sales in January to be $400,000, February to be $300,000, and March to be $500,000. 10% of the sales will be paid for in cash. The remainder will be charged on account. From past experience, the company knows their customers take 3 months to pay their bills in total, with 40% of a month’s sales on account collected in the month of sale, another 50% collected in the month following sale, and the remaining 10% are collected in the second month following sale. All credit sales are collected. The amount of credit sales in October 2019 totaled $600,000, November 2019 totaled $700,000, and December 2019 totaled $800,000.

1. Prepare a schedule of expected cash collections from sales for only January and February 2020.

                                       January                                                 February

2. What is the expected accounts receivable balance on March 31, 2020?   $_________________

Show your work:

Answer 1