Gamestop Canada has forecasted the following monthly sales:

January: $85,000               July: $30,000

February: $78,000           August: $30,000

March: $10,000                September: $40,000

April: $10,000                    October: $70,000

May: $25,000                     November: $110,000

June: $20,000                     December: $120,000

Total sales = $628,000

The firm sells its video game for $10 per unit, and the cost to produce the game is $5 per unit. A level production policy is followed. Each month’s production is equal to annual sales (in units) divided by 12. Of each month’s sales, 40 percent are for cash and 60 percent are on account. All accounts receivable are collected in the month after the sale is made.

a. Construct a month production and inventory schedule in units. Beginning inventory in January is 10,000 units. (Note: To do part a, you should work in terms of units of production and units of sales.)

b. Prepare a monthly schedule of cash receipts. Sales in the December before the planning year were $110,000. Work part b using dollars.

c. Determine a cash payments schedule for January through December. The production costs of $5 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $30,000 per month.

d. Prepare a monthly cash budget for January through December. The beginning cash balance is $4,000, and that is also the minimum desired.

Answer rating: 100% (QA)

SOLUTION a Production and Inventory Schedule in units January 10000 beginning inventory 62800012 10000 5233333 62333 round to the nearest whole unit F... View the full answer