Square Peg Corp.'s actual sales for the previous quarter (Q4) and estimated sales for the next four
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Question:
Square Peg Corp.'s actual sales for the previous quarter (Q4) and estimated sales for the next four quarters are given below (in $ million):
Quarter | Q4 | Q1 | Q2 | Q3 | Q4 |
---|---|---|---|---|---|
Sales ($ million) | 120 | 132 | 145 | 160 | 176 |
20% of sales are cash sales and the remainder are credit sales which are collected in the following quarter. The cash balance at the beginning of Q1 is $200 million.
The company sells its products for $10 per unit and it costs $5 to produce each unit. All production costs are paid in the quarter of the sale. In addition, the company incurs fixed costs of $40 million per quarter.
The company uses level production, producing one quarter of expected annual production in quarters 1 to 4.
- Determine cash collections for Q1 to Q4. What are cash collections in Q4 (in $ million).
- Determine cash disbursements for Q1 to Q4. What are cash disbursements in Q4 (in $ million)?
- Determine cash balance at the end of Q1 to Q4. What is the cash balance at the end of Q4 (in $ million)?
Related Book For
Managerial Accounting Decision Making and Performance Management
ISBN: 978-0273764489
4th edition
Authors: Ray Proctor
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