Problem 1. Olympia Productions, Inc., makes award medallions that are attached to ribbons. Each medallion requires 18 inches of ribbon. The sales forecast for February is 8,000 medallions. Estimated beginning inventories and desired ending inventories for February are:
Estimated
Beginning Inventory Desired Ending Inventory
Medallions 4,000 3,200
Ribbon (yards) 200 80
(a) Calculate the number of medallions to be produced in February.
(b) Calculate the number of yards of ribbon to be purchased in February.
Problem 2. Kiel Center's sales are all made on account. The firm's collection experience has been that 35% of a month's sales are collected in the month the the sale is made, 55% are collected in the month following the sale, and 8% are collected in the second month following the sale. The sales forecast for the months of June through September is:
June $ 140,000
July 160,000
August 170,000
September 195,000
Calculate the cash collections that would be included in the cash budgets for August and September. (Omit the "$" sign in your response.)
Cash collections
August $: __________
September $: __________
Problem 3. Brooklyn Furniture, a retail store, has an average gross profit ratio of 48%. The sales forecast for the next four months follows:
May $ 251,000
June 217,000
July 314,000
August 406,000
Management's inventory policy is to have ending inventory equal to 340% of the cost of sales for the subsequent month, although it is estimated that the cost of inventory at April 30 will be $419,000.
Calculate the purchases budget, in dollars, for the months of May and June.
Purchases
May $: __________
June $ :__________