Q1) Carter Company has projected sales and production in units for second quarter of next year which are given below:
| |
April |
May |
June |
| Sales |
60,000 |
40,000 |
50,000 |
| Production |
50,000 |
50,000 |
60,000 |
Questions:
a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in month in which they are incurred and balance in the following month. Selling and administrative expenses (all of which are paid in cash) amount to $120,000 per month. Accounts payable balance on March 31 totals $192,000, all of which will be paid in April. Create a schedule for each month illustrating budgeted cash disbursements for Carter Company.
b. Suppose that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in month of sale, 30% in month following the month of sale, and remaining 10% in second month following month of sale. Accounts receivable on March 31 totaled $510,000 $(90,000 from February's sales and the remainder from March). Create a schedule for each month illustrating budgeted cash receipts for Carter Company.