Larson Mfg. has projected cost of goods sold for June 2006 of $1,200,000. Of this amount, $75,000
Question:
Larson Mfg. has projected cost of goods sold for June 2006 of $1,200,000. Of this amount, $75,000 represents fixed overhead costs. Total variable costs for the company each month average 70% of sales. The company's cost to retail (CGS to sales) ratio is 60%, and the company normally shows a 15% rate of net income on sales. All purchases and expenses (except depreciation) are paid in cash: 65% in the month incurred and 35% in the following month. Depreciation is $37,500 per month.
a. What are Larson's expected sales for June?
b. What are Larson's expected variable selling and administrative costs for June?
c. What are Larson's total fixed costs? How much of this is selling and administrative fixed cost?
d. Larson normally collects 55% of its sales in the month of the sale and the rest in the next month. What are expected cash receipts and disbursements related only to June's transactions?
Step by Step Answer:
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn