Fun Silly Toys (FST) produces a number of space themed toys (e.g., astronaut action figures). One of the newer divisions at FST is the board game division, which currently produces and sells one product: Rocket Exploration.

FST’s financial analyst is currently working on preparing the budgets for the next fiscal year. She has forecasted monthly unit sales, based on a sales price of $33/unit, as follows:

January	18,800 units
February	17,400 units
March	17,900 units
April	19,100 units
May	18,400 units
June	18,200 units
July	16,600 units
August	15,900 units
September	16,300 units
October	17,200 units
November	19,400 units
December	21,800 units
Total Sales	217,000 units

To smooth production, FST is planning to produce 20,000 units per month every month.

FST uses variable costing and FIFO to value inventory and determine cost of goods sold. At the beginning of the year it is expected that the beginning finished goods inventory will be valued at $103,750 (5,000 units). FST does not maintain any work-in-process inventories.

The production standards for one unit of Rocket Exploration are as follows:

		Usage		Resource Cost
Direct Materials		1.80 lbs / unit		$6.00 / lb
Direct Labor		0.25 hrs / unit		$18.00 / hr
Variable Overhead		0.60 MHrs / unit		$10.00 / MHr

Regarding the direct materials, FST has a policy to hold 25% of the next month’s raw material requirements in their ending raw material inventory. At the start of the year, FST only had 8,000 lbs on hand (valued at $48,000). All materials are purchased on account, and are paid in the month following the purchase (FST is expected to have beginning accounts payable of $193,800). For the following fiscal year, FST is planning to increase production to 22,000 units per month.

FST expects to incur $2.50 per unit in shipping costs, $900,000 in fixed manufacturing overhead (of which $210,000 is depreciation) and $625,000 in fixed non-manufacturing costs (of which $35,000 is depreciation).

FST knows that typically 50% of their sales are for cash, and 50% are on account. Of the sales on account, 50% are typically collected in the month following the sale, 30% are collected two months following the sale, and the remaining 20% are collected three months following the sale. FST expects beginning accounts receivable to be $464,000.

FST expects to begin the year with $15,000 in cash.

Determine the total amount of material in lbs. that is expected to be purchased for the year.

Answer rating: 100% (QA)

To find ending amounts payable balance for the years Given All material are purchased on account and ... View the full answer