Question

1. Preston, Inc., manufactures wooden shelving units for collecting and sorting mail. The company expects to produce 350 units in July and 400 units in August. Each unit requires 13 feet of wood at a cost of $1.30 per foot. Preston wants to always have 290 feet of wood on hand in materials inventory.

Compute Preston’s raw materials purchases budget for July and August.

2. Preston, Inc., manufactures wooden shelving units for collecting and sorting mail. The company expects to produce 350 units in July and 410 units in August. Each unit requires 2.50 hours of direct labor, and labor wages average $8 per hour.

Compute Preston’s direct labor budget for July and August.

3.Getty Company expects sales for the first three months of next year to be $210,000, $270,000 and $275,000, respectively. Getty expects 50 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 10 percent in the month of the sale and 90 percent in the following month.

Compute a schedule of Getty’s cash receipts for the months of February and March.

4. Crew Clothing (CC) sells women’s resort casual clothing to high-end department stores and in its own retail boutiques. CC expects sales for January, February, and March to be $420,000, $480,000, and $500,000, respectively. Twenty percent of CC’s sales are cash, with the remainder collected evenly over two months. During December, CC’s total sales were $730,000. CC is beginning its budget process and has asked for your help in preparing the cash budget.

Compute CC’s expected cash receipts from customers for each month.

5. Garfield Corp. expects to sell 1,200 units of its pet beds in March and 500 units in April. Each unit sells for $120. Garfield’s ending inventory policy is 30 percent of the following month’s sales. Garfield pays its supplier $40 per unit.  

Compute Garfield's budgeted purchases for March.

Answer 1