Question

JC Floor Design makes ceramic tiles

December sales were:

500,000 units

Selling price $2 per unit

1,000,000 total sales

The Marketing Department, projects sales to:

increase by 5% in January     

February sales will be 15,000 units less than January

March sales will be 3% higher than February sales

April sales will be the 5,300 units less than march

The price is not expected to increase

JC inventory policy is to maintain an ending inventory equals to 30% of next month sales. Actual inventory is 168,000 units                         

                                                                                   

Clay the material to make the tiles cost $.50 per pound and each tile requires .6 pound. Actual clay inventory is 60,000 pounds and the inventory policy is to maintain an inventory equal to 25% of next month production requirement.

April production is expected to be 525,000 units. The cost of direct materials purchased in December was $150,000                                

                                                                                   

Each tile requires .10 hours and the labor hourly rate is $8.00 per hour       

Variable overhead rate is 20% of labor and fixed overhead is 25,000 monthly

Selling and administrative expenses are expected to be

Administrative salaries	$15,000 per month
Sales salaries	$12,000 per month
Sales commissions	10% of sales

70% of sales are cash sales and the remaining are collected in the next month

Material are paid 60% cash and the remaining the next month

                                               

The company has the following obligations:

100,000 in dividends will be paid in February

A new machine will be acquired in January with a cost of 250,000

A short-term loan with an outstanding balance of $150,000 is used to manage the cash position. Interest on the short-term loan are 1% monthly

Taxes of last quarter were $240,000 and will be paid in March. The company tax rate is 35%. and taxes are paid in the next quarter.

REQUIRED:

Compute Product Cost
Compute Total sales expenses for the quarter
Compute Selling and Administrative expenses for February
Compute Cash Receipts for January
Compute Total cash payments for materials in March
Total cash available for February
Compute ending cash balance for March

Answer 1

As per policy, only four parts of a question is allowed to answer at a time, here answering five parts for you :

Production Budget:
	Jan	feb	mar	apr	Quarter
Sales	1050000	1020000	1050600
Units sold	525000	510000	525300	520000
CS reqd.	153000	157590	156000
total need	678000	667590	681300
less:OS	168000	153000	157590
Production	510000	514590	523710	525000	1548300
Material Req. & Payment Budget:
Mat. Reqd. for production	306000	308754	314226	315000
add: closing material inventory	77188.5	78556.5	78750
Total Mat. Needed	383188.5	387310.5	392976
less:opening material inventory	60000	77188.5	78556.5
Mat. Reqd. to purchase	323188.5	310122	314419.5
Material purchase value	161594.25	155061	157209.75
Payment made for material
for Dec	60000
for jan	96956.55	64637.7
for feb		93036.6	62024.4
for mar			94325.85
total payment in the month	156956.55	157674.3	156350.25
1)Product cost:		Amount $
Material	0.6*0.5=	0.3
D Labor	0.1*8=	0.8
V. Overhead	(0.1*8)*0.2=	0.16
F. Overhead	75000/1548300=	0.05
Per unit product cost		1.31
2)Total Sales expenses for the
quarter=
sales salaries	12000	12000	12000		36000
Sales commi	105000	102000	105060		312060
Total sales expenses					348060
Administration exp.	15000	15000	15000
3) Selling and Admin exp.for
February:		129000
4) Cash receipts for January:
For Dec	300000
for Jan	735000
Cash receipts for January:	1035000
5) Total cash payments for Mat. In
March = $156350.30