Question

QUESTION 3

1. The sales budget is provided below for the product of Company ABC.

Jan	10,000 units
Feb	40,000 units
Mar	50,000 units
Apr	60,000 units
May	40,000 units

1. Finished goods at the end of each month must be 20% of the next month’s budgeted sales.
2. On Dec 31 of the last year, the finished goods totaled 3,000 units.
3. The selling price is $1 per unit.
4. 70% of the credit sales are collected in the month of sale, 25% in the month following sale, and the remainder are uncollectible.

Required: (Please note that you should answer the questions in Word offline and please do NOT answer in the Blackboard!!!)

5. Prepare a budget showing the required production each month for January, February, March, and the quarter.
6. Prepare the cash collection for each month for January, February, March, and the quarter.

Answer 1

Answer :-

Months	Units Sold	Finished Goods	Sales Value
December		3000
January	10000	8000	10000
February	40000	10000	40000
March	50000	12000	50000
April	60000	8000	60000
May	40000	0	40000
Production Budget
	January	February	March
Opening Finished Goods	3000	8000	10000
Sales Units	10000	40000	50000
Closing Finished Goods	8000	10000	12000
Production of Goods	15000	42000	52000
Sales Budget
	January	February	March
Sales Units	10000	40000	50000
Sales Price/ Unit	1	1	1
Sales Value	10,000.00	40,000.00	50,000.00
Cash Received
70% received in same month	7,000.00	28,000.00	35,000.00
25% in following month	-	2,500.00	10,000.00
Total Cash Received	7,000.00	30,500.00	45,000.00