Question

Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will...

Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $500,000 starting May 1. The bank would charge interest at the rate of 1.00 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May.

The following information is available:

  • The company budgeted sales at 650,000 units per month in April, June, and July and at 500,000 units in May. The selling price is $4 per unit.
  • The inventory of finished goods on April 1 was 162,500 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process.
  • The inventory of raw materials on April 1 was 61,250 pounds. At the end of each month, the raw materials inventory equals no less than 40 percent of production requirements for the following month. The company purchases materials in quantities of 69,500 pounds per shipment.
  • Selling expenses are 10 percent of gross sales. Administrative expenses, which include depreciation of $2,500 per month on office furniture and fixtures, total $165,000 per month.
  • The manufacturing budget for tiles, based on normal production of 500,000 units per month, follows:
Materials (0.25 pound per tile, 125,000 pounds, $4 per pound) $ 500,000
Labor 380,000
Variable overhead 190,000
Fixed overhead (includes depreciation of $210,000) 420,000
Total $ 1,490,000

Required:

a-1. Prepare schedules computing inventory budgets by months for production in units for April, May, and June.
a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for April and May.

b. Prepare a projected income statement for May. Cost of goods sold should equal the variable manufacturing cost per unit times the number of units sold plus the total fixed manufacturing cost budgeted for the period. When calculating net sales assume cash discounts of 1 percent and bad debt expense of 0.50 percent.

Prepare schedules computing inventory budgets by months for production in units for April, May, and June.

BRIGHTON, INC.
Schedule Computing Production Budget (Units)
For April, May, and June
April May June
? ? ? ?
? ? ? ?
Total needs
? ? ? ?
Budgeted production − Units

Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for April and May.

Schedule Computing Raw Materials Inventory
Purchase Budget (Pounds)
For April and May
April May
Total pound needs
Balance required to purchase
Budgeted purchases − Pounds

Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for April and May.

Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for April and May.

Schedule Computing Raw Materials Inventory
Purchase Budget (Pounds)
For April and May
April May
Total pound needs
Balance required to purchase
Budgeted purchases − Pounds

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will...
Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $500,000 starting May 1. The bank would charge interest at the rate of 1 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May. The following information...
Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will...
Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $500,000 starting May 1. The bank would charge interest at the rate of 0.75 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May. The following information...
RAMOS CO. Direct Materials Budget For April, May, and June April May June Budget production (units)...
RAMOS CO. Direct Materials Budget For April, May, and June April May June Budget production (units) 600 730 700 units Materials needed for production (lbs.) Total materials requirements (lbs.) Materials to be purchased (lbs.) Materials price per pound Budgeted cost of direct materials purchases Required information Ramos Co. provides the following sales forecast and production budget for the next four months. April May June July Sales (units) 660 740 690 760 Budgeted production (units) 600 730 700 700 The company...
2. Zira Co. reports the following production budget for the next four months. April May June...
2. Zira Co. reports the following production budget for the next four months. April May June July Production (units) 656 710 688 668 Each finished unit requires six pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month’s production needs. Beginning raw materials inventory for April was 1,181 pounds. Assume direct materials cost $5 per pound. Prepare a direct materials budget for April, May, and June. (Round your...
Ramos Co. provides the following sales forecast and production budget for the next four months: April...
Ramos Co. provides the following sales forecast and production budget for the next four months: April May June July Sales (units) 670 750 700 770 Budgeted production (units) 610 740 710 710 The company plans for finished goods inventory of 290 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 20% of next month’s production needs. Beginning direct...
Zira Co. reports the following production budget for the next four months. April May June July...
Zira Co. reports the following production budget for the next four months. April May June July Production (units) 576 630 608 588 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month’s production needs. Beginning raw materials inventory for April was 922 pounds. Assume direct materials cost $5 per pound. Prepare a direct materials budget for April, May, and June. (Round your intermediate...
Use the following information for the Exercises below. Ruiz Co. provides the following sales forecast for...
Use the following information for the Exercises below. Ruiz Co. provides the following sales forecast for the next four months:     April May June July Sales (units) 610 690 640 730 The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 122 units. Assume July's budgeted production is 640 units. In addition, each finished unit requires five pounds (lbs.) of raw materials and...
Ramos Co. provides the following sales forecast and production budget for the next four months. April...
Ramos Co. provides the following sales forecast and production budget for the next four months. April May June July Sales (units) 530 610 560 630 Budgeted production (units) 470 600 570 570 The company plans for finished goods inventory of 150 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 30% of next month’s production needs. Beginning direct...
ZIRA CO. Direct Materials Budget For April, May, and June April May June Budgeted production (units)...
ZIRA CO. Direct Materials Budget For April, May, and June April May June Budgeted production (units) 694 735 727 units Materials requirements per unit 4 4 4 lbs. Materials needed for production (lbs.) 2,776 2,940 2,908 lbs. Budgeted ending inventory (lbs.) 882 872 872 lbs. Total materials requirements (lbs.) 3,658 3,812 3,780 lbs. Beginning inventory (lbs.) 833 882 872 lbs. Materials to be purchased (lbs.) 2,825 2,930 2,908 lbs. Cost per lb. $4 $4 $4 per lb. Total budgeted direct...
Part #1: K Company is planning its cash disbursements for the upcoming months. In June, it...
Part #1: K Company is planning its cash disbursements for the upcoming months. In June, it anticipates $72,000 in Purchases, $130,000 in Payroll, and $40,000 in Loan Payments. In July, it anticipates $77,000 in Purchases, $140,000 in Payroll, and $35,000 in Loan Payments. In August, it anticipates $84,000 in Purchases, $150,000 in Payroll, and $30,000 in Loan Payments. Purchases are usually paid half in the current month and half in the following month. Payroll is paid 70 percent in the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • In a survey, 11 people were asked how much they spent on their child's last birthday...
    asked 8 minutes ago
  • Discussion 7.1: Practice Critical Thinking How well do you understand this material? Reading the material is...
    asked 9 minutes ago
  • A credit score measures a​ person's creditworthiness. Assume the average credit score for Americans is 709....
    asked 12 minutes ago
  • A Database Administrator (DBA) is play both managerial role and technical role in a modern organization;...
    asked 27 minutes ago
  • The Federal Election Commission collects information about campaign contributions and disbursements for candidates and political committees...
    asked 27 minutes ago
  • In the week before and the week after a​ holiday, there were 10,000 total​ deaths, and...
    asked 30 minutes ago
  • 1. Identify the vertex of the quadratic equation y=2x2+8x-10. using the formula 2. Write the equation...
    asked 45 minutes ago
  • How well do you understand this material? Reading the material is separate than understanding it; further,...
    asked 48 minutes ago
  • Analyze the behavior of capacitors under steady state direct current and high frequency AC current (500...
    asked 48 minutes ago
  • Traffic on the eastbound approach of a signalized intersection is traveling at 48 km/h, with a...
    asked 1 hour ago
  • Students in a chemistry class convince their teacher to use the following "group grading" scenario. Students...
    asked 1 hour ago
  • The letters of the word "REARRANGE" are randomly rearranged. What is the probability that this rearrangement...
    asked 1 hour ago