Determine the collection pattern for the company

Question

Company A started the year 2013 with following balances on 1/1/2013.

Cash $380,000

Accounts receivable              $200,000

Raw material inventory        $24,000

WIP inventory                        $0

Finished goods inv                 $0

Account payable                    $96,000 (from 2012 raw material purchase)

During the year:

1. Purchased raw material inventory for $280,000; used $282,000 for production.
2. Paid $178,000 to direct labor and $95,000 to indirect labor: $90,000 of indirect labor is variable and $5000 is fixed.
3. Other factory costs incurred: all fixed.
   1. Depreciation                      $12,000
   2. Utilities                               $24,000
   3. Rent                                     $60,000
   4. Tax and insurance            $45,000
   5. Supervisory salary            $90,000
4. Completed 25,000 units. Ending WIP inventory balance on 12/31/2013 was $0.
5. Sold ALL 25,000 units for a selling price of $90.00 per unit; all sales are on credit. 80% of the sales were collected in 2013 and the balance will be collected next year. This is the collection pattern for the company.
6. Sales commission paid: $5.40 per unit
7. Other selling and administration expense for the year: all fixed.
   1. Salary                               $200,000
   2. Utilities                             $20,000
   3. Depreciation                     $50,000
   4. Tax and insurance            $120,000
8. Raw material purchase was made on account. 60% paid in the same year and 40% will be paid next year.
9. All other costs are paid in 2013.

1. Prepare the income statement for 2013 (use ABSORPTION COSTING).
2. What is the cash balance as of 12/31/2013?
3. What is the Accounts receivable balance on 12/31/2013?
4. What is the accounts payable balance on 12/31/2013?
5. What is the BEP in units? In dollars?
6. For the year 2014, company wants to double profit it earned in 2013. How many units should be produced and sold?
7. The company's capacity is 32000 units per year. During 2013 a retail shop approached the company for a special order of 8000 units and was willing to pay $35 per unit. There was no sales commission for these units in special order sales. Did the company accept this special order? If so, what was the net income for the year 2013?