Smithfield Company manufactures widgets. Smithfield's sales budget shows monthly sales for the upcoming quarter as follows:...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Smithfield Company manufactures widgets. Smithfield's sales budget shows monthly sales for the upcoming quarter as follows: July August September October 10,000 units 8,000 units 12,000 units 14,000 units Each unit sells for $20.00. 80% of sales are on account. Smithfield's collections on sales on account are expected as follows: 65% in the month of the sale 20% in the month following the month of sale 12% in the second month following the month of sale 3% uncollectible Smithfield's accounts receivable balance as of June 30 is $93,000 (net of expected bad debts which are reserved for) of which $30,000 represents uncollected May sales and $63,000 represents uncollected June sales. These amounts just represent what is collectible (uncollectible amounts have been written off). Company policy is to have a finished goods inventory at the end of each month equal to 20% of the next month's sales. Variable product costs are as follows: DM (2 pounds of steel at $4 per pound) $8.00 DL (1/4 hour at $12 per hour) $3.00 $1.50 Variable Overhead (50% of DL) Ending inventory levels for raw materials should equal 40% of the production needs for the next month. Smithfield pays for 20% of direct material purchases during the month of purchase and the remaining 80% is paid during the following month. Other variable costs are incurred and paid during the month of production. The fixed operating costs total $10,000 a month (including depreciation of $3,000). Payments related to fixed overhead are made during the month incurred. Raw Materials and Finished goods inventories at the beginning of July were in accordance with the company's inventory policy. 1. What were total sales for each of the following months? 2. What are the expected cash collections for each of the following months? 3. How many widgets does Smithfield expect to produce during the months of July, August and September? 4. What is the RM purchases budget for July and August (in pounds and dollars)? 5. Prepare a cash budget for August. Smithfield Company manufactures widgets. Smithfield's sales budget shows monthly sales for the upcoming quarter as follows: July August September October 10,000 units 8,000 units 12,000 units 14,000 units Each unit sells for $20.00. 80% of sales are on account. Smithfield's collections on sales on account are expected as follows: 65% in the month of the sale 20% in the month following the month of sale 12% in the second month following the month of sale 3% uncollectible Smithfield's accounts receivable balance as of June 30 is $93,000 (net of expected bad debts which are reserved for) of which $30,000 represents uncollected May sales and $63,000 represents uncollected June sales. These amounts just represent what is collectible (uncollectible amounts have been written off). Company policy is to have a finished goods inventory at the end of each month equal to 20% of the next month's sales. Variable product costs are as follows: DM (2 pounds of steel at $4 per pound) $8.00 DL (1/4 hour at $12 per hour) $3.00 $1.50 Variable Overhead (50% of DL) Ending inventory levels for raw materials should equal 40% of the production needs for the next month. Smithfield pays for 20% of direct material purchases during the month of purchase and the remaining 80% is paid during the following month. Other variable costs are incurred and paid during the month of production. The fixed operating costs total $10,000 a month (including depreciation of $3,000). Payments related to fixed overhead are made during the month incurred. Raw Materials and Finished goods inventories at the beginning of July were in accordance with the company's inventory policy. 1. What were total sales for each of the following months? 2. What are the expected cash collections for each of the following months? 3. How many widgets does Smithfield expect to produce during the months of July, August and September? 4. What is the RM purchases budget for July and August (in pounds and dollars)? 5. Prepare a cash budget for August.
Expert Answer:
Answer rating: 100% (QA)
1 Total sales for each of the following months are July 10000 units x 2000 200000 August 8000 units x 2000 160000 September 12000 units x 2000 240000 ... View the full answer
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
Posted Date:
Students also viewed these accounting questions
-
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000...
-
Finished goods inventory at the end of December is 3,000 units. Ending finished goods are equal to 30 percent of next month's sales. April 2016 sales are expected to total 16,000 units. What should...
-
Sherman has budgeted sales for the upcoming quarter as follows: _______April ___ May ____ June Units....1,600......1,900......1,750 The desired ending finished goods inventory for each month is...
-
Which description does NOT fit in description of "issues" in the context of international standards? a. An unsettled matter. b. A vital matter. c. A change in the environment. d. A concern or...
-
The tabular analysis of transactions for Nigel Company is presented in E3-4. Instructions Prepare an income statement and a retained earnings statement for August and a classified balance sheet at...
-
Using a research database, perform a search to learn how Fortune magazine determines which companies make its annual lists. Research the following lists. Then organize and present a five- to...
-
Use the comparative balance sheet from Application Problem 17-1 to complete this problem. Instructions: 1. Based on CyberOptics comparative balance sheet prepared in Application Problem 17-1,...
-
Edington Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2010, the following data are available. 1. Sales: 20,000...
-
Sometimes leaders in procurement departments have to make large equipment or property acquisition at a significant cost to the company. List the 10 steps in the Equipment Acquisition Process
-
When Pablo Gonzalez died unmarried in 2018, he left an estate valued at $7,850,000. His trust directed distribution as follows: $20,000 to local hospital, $160,000 to his alma mater, and the...
-
How is pressure measured in structural engineering, and what are some examples of situations where pressure might be a concern in the design of a structure?
-
Eternal Friend, a family-owned manufacturer of pet caskets, has grown exponentially in recent years. However, they are having difficulty preparing for future growth. The only information system used...
-
Insomniac records is a record label specializing in underground music artists. Each year, Insomniac records total earnings are taxed at the current corporate tax rate, and then taxed as personal...
-
CAN YOU EXPLAIN HOW TO SELECT THE BEST CORRELATED FUNDS CORRELATION OF ALL MUTUAL FUNDS VIEIX VINIX VBTIX VTSNX RNWGX GSSUX JDVWX MVCKX MEFZX MWTSX VPMAX WSCRX FDIKX PFPRX PIREX VIEIX 1 VINIX...
-
How would you explain Boeing's capital structure (financing policy) changes (see D/E and D/V ratios in "Balance Sheet" section during the time data is available using all the relevant...
-
1) The following events affecting Miss Turner occurred at the end of 20x5. How do the follwing transactions affect Turner's gross income for 20x5? a) On December 31, National Corporation mailed...
-
BSO, Incorporated, has current assets of $1,160,000 and current liabilities of $580,000, resulting in a current ratio of 2.0. Required: Calculate the current ratio and determine whether it will...
-
After Theorem 1.5 we note that multiplying a row by 0 is not allowed because that could change a solution set. Give an example of a system with solution set S0 where after multiplying a row by 0 the...
-
Midwestern University, never a football powerhouse, has only won a total of 12 football games in the past four years. Because of this, and the Universitys heavy emphasis on basketball, football...
-
Tom and Lynda own Hercules Health Club. They provide the following information regarding their expected inventories of supplies and other materials. Tom and Lynda also inform you that the monthly...
-
What are the key differences between financial and managerial accounting?
-
On April 1, Topeka Brake Mfg. purchased new production scheduling software for \(\$ 480,000\). On May 15 , a representative of a computerized manufacturing technology company demonstrated new...
-
One product produced and sold by Outfitters Inc. is a sleeping bag for which annual projections are as follows: a. Compute the projected pre-tax profit to be earned on the sleeping bags during the...
-
Clean-N-Brite is a multiproduct company with several manufacturing plants. The Cincinnati plant manufactures and distributes two household cleaning and polishing compounds, regular and heavy-duty,...
Study smarter with the SolutionInn App