Tilson Corporation has projected sales and production in units for the second quarter of the coming year
Question:
Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows:
April | May | June | |||
Sales | 55,000 | 45,000 | 65,000 | ||
Production | 65,000 | 55,000 | 55,000 | ||
Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $193,000, which will be paid in April.
All units are sold on account for $16 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled 520,000 ($100,000 from February's sales and remainder from March's sales).
Required:
a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson Corporation.
b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Company.