Question;Aztec Company sells its product for $170 per unit. Its actual and projected sales follow. Units Dollars April (actual) 9,000 $1,530,000 May (actual) 3,200 544,000 June (budgeted) 6,000 1,020,000 July (budgeted) 7,000 1,190,000 August (budgeted) 4,400 748,000 All sales are on credit. Recent experience shows that 28% of credit sales is collected in the month of the sale, 42% in the month after the sale, 28% in the second month after the sale, and 2% proves to be uncollectible. The product?s purchase price is $110 per unit. All purchases are payable within 14 days. Thus, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has a policy to maintain an ending monthly inventory of 20% of the next month?s unit sales plus a safety stock of 115 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,536,000 and are paid evenly throughout the year in cash. The company?s minimum cash balance at month-end is $100,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $100,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 11% interest rate. On May 31, the loan balance is $48,500, and the company?s cash balance is $100,000. (Round amounts to the nearest dollar.) 1. Prepare a table that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July. Percent Collected in April May June July August Credit sales from: April May June July August Amount Collected in April May June July August Credit sales from: April May June July August "2. Prepare a table that shows the computation of budgeted ending inventories (in units) for April, May, June, and July." AZTEC COMPANY Budgeted Ending Inventory For April, May, June and July April May June July August Next month's budgeted sales Ratio of inventory to future sales Budgeted "base" ending inventory Safety stock Budgeted Ending Inventory 3. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month. AZTEC COMPANY Merchandise Purchases Budgets For May, June and July April May June July August Budgeted Ending Inventory (units) Budgeted unit sales for month Required units of available merchandise Budgeted beginning inventory (units) Budgeted purchases (units) Budgeted cost per unit Budgeted cost of merchandise purchases "4. Prepare a table showing the computation of cash payments on product purchases for June and July." Cash payments on product purchases (for June and July) Percent Paid in May June July August From purchases in: May June July August Amount Paid in Total May June July August From purchases in: May June July "5. Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month. (Do not round intermediate calculations.)" AZTEC COMPANY Cash Budget June and July June July Beginning cash balance cash receipts from customers Total cash available Cash disbursements: Payments on purchases Selling and administrative expenses Interest expense other option could be here *** see right <================ other options Total cash disbursements 1 additional loan (repayment) Preliminary cash balance 2 cash receipts from customers Additional loan (repayment) 3 interest expense Ending cash balance 4 payments on purchases 5 selling and administrative expenses Loan balance June July Loan balance - Beginning of month Additional loan repayment Loan balance - End of month "Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company?s management predicts that 5,400 skis and 6,400 pounds of carbon fiber will be in inventory on June 30 of the current year and that 154,000 skis will be sold during the next (third) quarter. A set of two skis sells for $340. Management wants to end the third quarter with 3,900 skis and 4,400 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $19 per pound. Each ski requires 0.5 hours of direct labor at $24 per hour. Variable overhead is applied at the rate of $12 per direct labor hour. The company budgets fixed overhead of $1,786,000 for the quarter." "1. Prepare the third-quarter production budget for skis. Prepare the third-quarter production budget for skis.""2. Prepare the third-quarter direct materials (carbon fiber) budget, include the dollar cost of purchases.Prepare the third-quarter production budget for skis.
Paper#40959 | Written in 18-Jul-2015Price : $27