Question

The sales budget is provided below for the product of Company ABC. Jan 30,000 units Feb...

The sales budget is provided below for the product of Company ABC.

Jan

30,000 units

Feb

20,000 units

Mar

10,000 units

Apr

20,000 units

May

30,000 units
  1. Finished goods at the end of each month must be 10% of the next month’s budgeted sales.
  2. On Dec 31 of the last year, the finished goods totaled 2,000 units.
  3. The selling price is $1 per unit.
  4. 80% of the credit sales are collected in the month of sale, 15% in the month following sale, and the remainder are uncollectible.
  1. Prepare a budget showing the required production each month for January, February, March, and the quarter.
  2. Prepare the cash collection for each month for January, February, March, and the quarter. (5 marks
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