I’m working on a accounting exercise and need an explanation and answer to help me learn.
1. On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company’s sales are made on account. The following information has been provided by Spicer’s management.
MonthCredit SalesJanuary$300,000(actual)February 400,000(actual)March 601,000(estimated)April 833,000(estimated)May 800,000(estimated)The company’s collection activity on credit sales historically has been as follows. Collections in the month of the sale50%Collections one month after the sale30 %Collections two months after the sale15 %Uncollectible accounts5 %Spicer’s total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.
Compute Spicer’s budgeted cash balance at the ends of March, April, and May.
2. The following information is from the manufacturing budget and the budgeted financial statements of Schenck Development Partners.
Direct materials inventory, January 1$68,000Direct materials inventory, December 31 56,000Direct material usage budgeted for the year 230,000Accounts payable to suppliers of materials, January 1 50,000Accounts payable to suppliers of materials, December 31 79,000
a. Compute the budgeted amount for purchases of direct materials during the year.
b. Compute the budgeted amount for cash payments during the year to suppliers of materials.
3. NuFloor Manufacturing produces floor tiles. The managers at NuFloor are trying to develop budgets for the upcoming quarter. The following data have been gathered for a particular tile design.
Projected unit sales 1,730casesSelling price per case$240 Inventory at the beginning of the quarter 150casesTarget inventory at the end of the quarter 100casesDirect labor hours needed to produce one case 2hoursDirect labor wages$10per hourDirect material cost per case$8 Variable manufacturing overhead cost per case$6 Fixed overhead costs for the upcoming quarter$220,000
a. Using this information, develop NuFloor’s sales forecast in dollars and its schedule of production in units. What’s the budget sales (in dollar)? Planned production (cases)?
b. What is NuFloor’s budgeted variable manufacturing cost per case?
c. Prepare NuFloor’s manufacturing cost budget. (choices: direct labor, direct material, fixed overhead, interest payable, rent payable, variable overhead)
Prepare NuFloor’s manufacturing cost budget. (Round your cost per unit answer to 2 decimal places.)
Variable manufacturing costs:Total variable manufacturing costs$0Total cost of finished goods manufactured$0
d. What is the projected ending inventory value for this particular tile design?