Question

In: Accounting

The Ace Battery Company has forecast its sales in units as follows:   January 1,900 May 2,450...

The Ace Battery Company has forecast its sales in units as follows:

  January 1,900 May 2,450
  February 1,750 June 2,600
  March 1,700 July 2,300
  April 2,200


Ace always keeps an ending inventory equal to 130 percent of the next month's expected sales. The ending inventory for December (January's beginning inventory) is 2,470 units, which is consistent with this policy.

Materials cost $14 per unit and are paid for in the month after production. Labour cost is $7 per unit and is paid in the month the cost is incurred. Overhead costs are $11,500 per month. Interest of $9,100 is scheduled to be paid in March, and employee bonuses of $14,300 will be paid in June.

a. Prepare a monthly production schedule for January through June. (Enter all values as positive value.)

Ace Battery Company
Production Schedule
January February March April May June July
  Forecasted unit sales                     
  Desired ending inventory                  
Beginning inventory                  
  Units to be produced                  


b. Prepare a monthly summary of cash payments for January through June. Ace produced 1,700 units in December.

Ace Battery Company
Summary of Cash payments
  December January   February March April May June
  Units produced                     
  Material cost $    $    $    $    $    $   
Labour cost                  
  Overhead cost                  
  Interest   
  Employee bonuses   
  Total cash payments $    $    $    $    $    $  

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