Assignment:
1) Caprice Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
• Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January.
• Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible.
• The cost of goods sold is 70% of sales.
• The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.
• The November beginning balance in the accounts receivable account is $78,000.
• The November beginning balance in the accounts payable account is $254,000.
. Required: A Prepare a Schedule of Expected Cash Collections for November and December.
. B. Prepare a Merchandise Purchases Budget for November and December.
2) Clay Corporation has projected sales and production in units for the second quarter of the coming year as follows:
April May June
Sales............ 50,000 40,000 60,000
Production... 60,000 50,000 50,000
Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April. All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following th month of sale. Accounts receivable on April 1 totaled $500,000 ($90,000 from February's sales and $410,000 from March's sales).
. Required: A. Prepare a schedule for each month showing budgeted cash disbursements for Clay Corporation.
. B. Prepare a schedule for each month showing budgeted cash receipts for Clay Corporation.
3) The Dean Corporation produces and sells a single product. The following data refer to the year just completed:
Beginning Inventory.................................. 0
Units Produced......................................... 20,000
Units Sold................................................ 19,000
Selling price per unit.................................. $350
Selling and administrative expenses:
Variable per unit....................................... $10
Fixed {total}........................................... $225,000
Manufacturing costs:
Direct materials cost per unit..................... $190
Direct labor cost per unit........................... $40
Variable manufacturing overhead cost per unit.... $25
Fixed manufacturing overhead {total}............. $250,000
Assume that direct labor is a variable cost.
Required:
A. Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
B.Prepare an income statement for the year using absorption costing.
C. Prepare a contribution format income statement for the year using variable costing.
D. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.