Question: Myrna Manufacturing is located in France and has projected sales

Myrna Manufacturing is located in France and has projected sales in units for its first four months of operations as follows:
January ..... 25,000
February .... 30,000
March ..... 32,000
April ...... 35,000
The product sells for €18 per unit. Twenty-five percent of the customers are expected to pay in the month of sale and take a 3% discount; 70% are expected to pay in the month following sale. The remaining 5% will never pay.
It takes 2 pounds of materials to produce a unit of product. The materials cost €0.75 per pound.
In January there are no raw materials in beginning inventories, but managers want to end each month with enough materials for 20% of the next month’s production. The firm pays for 60% of its materials purchases in the month of purchase and 40% in the following month. It takes one-half hour of labor to produce each unit. Labor is paid €15 per hour and is paid in the same month as worked. Overhead is estimated to be €2 per unit plus €25,000 per month (including depreciation of €12,000). Overhead costs are paid as incurred.
Myrna will begin January with no finished goods or work-in-process inventory. The managers wish to end each month with 25% of the following month’s sales in finished goods inventory and no work in process.

REQUIRED
Prepare a cash receipts and disbursements budget for February.


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  • CreatedJanuary 26, 2015
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