Question
In: Accounting
Nolan Johnson is CFO for a newly formed furniture manufacturing company. Below is the anticipated monthly...
Nolan Johnson is CFO for a newly formed furniture manufacturing company. Below is the anticipated monthly production for the first year of operation, and beyond. Nolan is interested in learning which of the first twelve months will require cash outlays of more than $100,000 toward the purchase of lumber.
Each unit requires 20 board feet of lumber at $5.80 per board foot. All lumber is purchased in the month prior to its expected use. Lumber purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in the second month following the month of purchase.
Month Units
January 0
February 800
March 500
April 1,200
May 700
June 900
July 300
August 600
September 800
October 1,300
November 400
December 400
January 600
Which months will require cash outlays in excess of the $100,000 amount? Does the production in any given month necessarily correspond to the cash flow for that same month? What are the business implications of your observation?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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during its most recent fiscal year:
Coffee Tables
End Tables
Lamps
Totals
Units
1,700
2,300
2,000
6,000
Sales Revenue
$ 2,125,000
$ 2,070,000
$ 280,000
$ 4,475,000
Variable Costs
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A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to...
A furniture company buys a forest to obtain wood for
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Cost of buying the forest = $730,000,000
Wood expected to be extracted = 400,000 ton
Cost of restoration of the forest =
$120,000,000
Residual/salvage value = $233,000,000
Trees cut in year 1 = 107,000 tons
Trees cut in year 2 = 89,000 tons
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) Displayed below are the monthly manufacturing cost data for ABC Company related to its wooden...
) Displayed below are the monthly manufacturing cost data for
ABC Company related to its wooden furniture products:
a) Factory
Security
$25,000
b) Factory
Rent
$12,000
c) Factory
Utilities
$5,000
d)
Wood
$210,000
e) Direct
Labour
$150,000
Calculate the total manufacturing overhead.
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2.11 %
3.13 %
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Upper E left bracket Upper R right bracketE
[R]
SD left bracket Upper R right bracketSD
[R]
Johnson & Johnson
7.2%
15.6%
Walgreen Company
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19.4%
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cost of goods sold. Mr. Mills is only aware of the LIFO and FIFO
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purposes, but speculates that FIFO has certain advantages for
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