Butler Inc. has projected Cost of Goods Sold (CGS) for June 2011 of $1,500,000. Of this amount, $80,000 represents fixed overhead costs. Total variable costs for the company each month average 70 percent of sales. The company’s cost to retail (CGS to sales) percentage is 60 percent, and the company normally generates net income equal to 15 percent of sales. All purchases and expenses (except depreciation) are paid 65 percent in the month incurred and 35 percent in the following month. Depreciation is $45,000 per month.
a. What are Butler Inc.’s expected sales for June?
b. What are Butler Inc.’s expected variable selling and administrative costs for June?
c. What are Butler Inc.’s total fixed costs? How much of this is fixed selling and administrative cost?
d. Butler Inc. normally collects 55 percent of its sales in the month of sale and the rest in the next month. What are expected cash receipts and disbursements related only to June’s transactions?