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ACC - Bigelow Company has just begun business and needs to generate a sales forecast

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Question;Bigelow Company has just begun business and needs to generate a sales forecast (in units) for their first quarter of operations. Sales forecast for the Bigelow Company are:Jan. 20,000Feb. 40,000March 80,000Apr. 50,000ADDITIONAL INFORMATIONa. Ending finished goods inventory should be equal to one half of next month?s sales projection.b. Each unit requires 3 pounds of material at a cost of $5 per pound.c. Labor cost is $10 per unit produced.d. Ending raw material inventory should be equal to twenty percent of next months material requirement.e. Factory overhead is $25,000 per month of which $10,000 is for depreciation.f. All costs are paid in the month incurred except purchases which are paid in the following month.g. Selling Price per unit is $50. All sales are on account with collections estimated at 10% in the month of sale, 60% the month following the sale, 25% the second following month and 5% are uncollectable.h. Bigelow began the business with $50,000 in cash and requires an ending cash balance of at least $5,000. Bigelow can borrow money from a local bank in $1,000 increments at an interest rate of 1% per month.REQUIRED:1. Prepare a sales budget for Jan. through March2. Prepare a production budget for Jan. through March.3. Prepare a purchases budget for Jan. through March.4. Prepare a cash budget for Jan. through March.Repeat requirements 1-4 for each of the following four assumptions. (A total of 5 cash budgets).Ending Finished Goods Ending Raw Material Raw Material CostInventory Inventory per poundA. 20% 20% $6B. 30% 30% $4C. 40% 50% $5D. 10% 10% $3

 

Paper#41803 | Written in 18-Jul-2015

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