In: Accounting
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 |
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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 |
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December | January | February | March | April | May | June | |
Units produced | |||||||
Material cost | $ | $ | $ | $ | $ | $ | |
Labour cost | |||||||
Overhead cost | |||||||
Interest | |||||||
Employee bonuses | |||||||
Total cash payments | $ | $ | $ | $ | $ | $ |