Question

In: Accounting

49. Assume a merchandising company’s estimated sales for January, February, and March are $112,000, $132,000, and...

49.

Assume a merchandising company’s estimated sales for January, February, and March are $112,000, $132,000, and $122,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 30% of next month’s cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company’s cash budget for February?

Multiple Choice

  • $69,120

  • $74,120

  • $75,120

  • $72,120

50.

Assume the following information:

Amount
Selling price $ 30
Variable expense per unit $ 12
Fixed expenses $ 12,500 per month
Unit sales 2,090 per month


What is the net operating income per month?

Multiple Choice

  • $25,120

  • $12,620

  • $25,080

  • $22,990

51.

Assume the following information:

Amount Per Unit
Sales $ 300,000 $ 40
Variable expenses 120,000 16
Contribution margin 180,000 $ 24
Fixed expenses 136,000
Net operating income $ 44,000


If the selling price per unit increases by 10% and unit sales drop by 5%, then the best of estimate of the new net operating income is:

Multiple Choice

  • $63,500.

  • $155,700.

  • $59,700.

  • $49,900.

Solutions

Expert Solution

49
January February
Budgeted sales 112000 132000
X Cost of goods sold % 60% 60%
Budgeted cost of goods sold 67200 79200
Add: Desired ending inventory 23760 21960
Less: Beginning inventory -20160 -23760
Budgeted purchases 70800 77400
Payment for January purchases 56640 =70800*80%
Payment for February purchases 15480 =77400*20%
Cash disbursements in February 72120
$72,120 is correct option
50
Unit sales 2090
X Contribution margin per unit 18 =30-12
Contribution margin 37620
Less: Fixed costs 12500
Net operating income 25120
$25,120 is correct option
51
Current unit sales 7500 =300000/40
New unit sales 7125 =7500*(1-5%)
New selling price 44 =40*1.10
Unit sales 7125
X Contribution margin per unit 28 =44-16
Contribution margin 199500
Less: Fixed costs 136000
Net operating income 63500
$63,500 is correct option
Workings for 49:
January February
Add: Desired ending inventory =79200*30% =122000*60%*30%
Less: Beginning inventory =67200*30% =79200*30%

Related Solutions

Assume a company’s estimated sales for January, February, and March are 25,000 units, 27,000 units, and 24,000 units, respectively.
Assume a company’s estimated sales for January, February, and March are 25,000 units, 27,000 units, and 24,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month’s unit sales. What is the required production in units for January?
Question 1: - Cash Budget: Estimated sales January February March April May Total Coffee sales (units)...
Question 1: - Cash Budget: Estimated sales January February March April May Total Coffee sales (units) 15,000 16,000 17,500 18,000 14,500 Your friend, MATT, has been running a successful coffee shop for the last couple of years. He has asked you to put together a cash budget. His regular accountant was too busy to help, but told MATT his depreciation expense was going to be $1,800 per year, using the straight-line method. He has supplied you with the following information...
Estimated sales January February March April May Total Coffee sales (units) 15,000 16,000 18,000 17,500 14,500...
Estimated sales January February March April May Total Coffee sales (units) 15,000 16,000 18,000 17,500 14,500 Your friend, Chris Coffee, has been running a successful coffee shop for the last couple of years. He has asked you to put together a cash budget. His regular accountant was too busy to help, but told Chris his depreciation expense was going to be $9,000 per year, using the straight-line method. He has supplied you with the following information (above) to help you...
Cash Budget: Estimated sales January February March April May Total Coffee sales (units) 15,000 16,000 17,500...
Cash Budget: Estimated sales January February March April May Total Coffee sales (units) 15,000 16,000 17,500 18,000 14,500 Your friend, Chris Coffee, has been running a successful coffee shop for the last couple of years. He has asked you to put together a cash budget. His regular accountant was too busy to help, but told Chris his depreciation expense was going to be $1,800 per year, using the straight-line method. He has supplied you with the following information (above) to...
It is January 1 of Year 2. Sales for Harry Company for January, February, and March...
It is January 1 of Year 2. Sales for Harry Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 80% of sales are credit sales; the remaining 20% of sales are cash sales. Of these credit sales, 10% are collected during the month of sale, 30% in the following month, and 60% in the second following month. TOTAL sales for November and December of Year 1 were $200,000 and $400,000, respectively....
the cash sales and credit sales projected for sarahs kitchen are as follows: January february march...
the cash sales and credit sales projected for sarahs kitchen are as follows: January february march april may cash 17,000 19640 16200 15380 17390 credit 40,000 42000 48000 50000 49500 if collections of credit sales are 70% the first month and 30% the second month, what would be the cash receipts for march, april, and may
Bill Johnson's Company Sales for January, February, and March are expected to be $200,000, $210,000, and...
Bill Johnson's Company Sales for January, February, and March are expected to be $200,000, $210,000, and $190,000, respectively. All sales are on account and are collected 50% in the month of the sale and 45% in the following month. The remaining 5% is determined to be uncollectible. Raw materials are purchased one month before being needed, and all purchases and expenses are paid for as incurred. The cash balance at February 1 is $8,750. Activities for January, February, and March...
Chen Grocery recorded sales for January, February, and March as RM22,000, RM36,000 and RM50,000, respectively. For...
Chen Grocery recorded sales for January, February, and March as RM22,000, RM36,000 and RM50,000, respectively. For any given month of sales, the following percentages are received over time in cash: 60% in cash from that same month of sales; 30% in cash from the previous month's sales; and 10% in cash from the sales from two months ago. What amount of cash will Chen Grocery received during February and March respectively? Select one: a. RM28,200 and RM43,000 b. RM64,200 and...
The following are budgeted data:   January February March Sales in units 16,600 23,200 19,600 Production...
The following are budgeted data:   January February March Sales in units 16,600 23,200 19,600 Production in units 19,600 20,600 19,300   One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 25% of the following month's production needs. Purchases of raw materials for February would be budgeted to be: Garrison 16e Rechecks 2017-10-03 Multiple Choice 20,925 pounds 20,575 pounds 20,275 pounds 18,325 pounds , Depasquale Corporation is...
SALES PER MONTH DURING THE LAST YEAR 20X1 JANUARY $ 550,000 FEBRUARY $ 825,000 MARCH $...
SALES PER MONTH DURING THE LAST YEAR 20X1 JANUARY $ 550,000 FEBRUARY $ 825,000 MARCH $ 575,000 APRIL $ 870,000 MAY $ 1,080,000 JUNE $ 1,065,000 JULY $ 1,070,000 AUGUST $ 1,060,000 SEPTEMBER $ 1,180,000 OCTOBER $ 1,140,000 NOVEMBER $ 1,290,000 DECEMBER $ 1,460,000 I. Sales Projection: 20X2 After consulting the Company's Management Committee, it was agreed that business plans and strategies were deemed appropriate, a 35% increase in sales reported during the months of last year 20x1. All sales...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT