Question

1. Shadee Corp. expects to sell 530 sun visors in May and 380 in June. Each visor sells for $20. Shadee’s beginning and ending finished goods inventories for May are 85 and 45 units, respectively. Ending finished goods inventory for June will be 65 units.

It expects the following unit sales for the third quarter:

July	560
August	450
September	450

Sixty percent of Shadee’s sales are cash. Of the credit sales, 52 percent is collected in the month of the sale, 36 percent is collected during the following month, and 12 percent is never collected.

Required:

Calculate Shadee’s total cash receipts for August and September. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)

	August	September
Total Cash Receipts

2. Croy Inc. has the following projected sales for the next five months:

Month	Sales in Units
April	3,480
May	3,820
June	4,570
July	4,160
August	3,950

Croy’s finished goods inventory policy is to have 50 percent of the next month’s sales on hand at the end of each month. Direct materials costs $3.20 per pound, and each unit requires 2 pounds. Direct materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Direct materials on hand at March 31 totaled 3,650 pounds.

Required:

1. Determine budgeted production for April, May, and June.

	April	May	June
Budgeted Production (Units)

2. Determine budgeted cost of materials purchased for April and May.

	April	May
Budgeted Cost of Material Purchased

Answer 1

Solution-2

Statement Showing Production Budget
	Apr	May	Jun		Total	Jul
Sales	3480	3820	4570		11870	4160
Desired Ending invenry ( 50 % of Next Month sales)	1910	2285	2080		2080	1975
tal Unit Needed	5390	6105	6650		13950	6135
Less: Beg. Invenry	1740	1910	2285		1740	2080
Production required	3650	4195	4365		12210	4055
* July Ending Inventory= Aug Sales X 50%
Statement Showing Raw Material Purchase Budget
	Apr	May	Jun		Total
Production Required	3650	4195	4365		12210
Pounds require / Unit	2	2	2		2
RM for Production	7300	8390	8730		24420
Desired Ending invenry ( 50% of Next month Requirement)	4195	4365	4055		4055
tal Raw material needed	11495	12755	12785		28475
Beg. RM Invenry	3650	4195	4365		3650
RM be purchased	7845	8560	8420		24825
Price/Pound	$3.20	$3.20	$3.20		$3.20
Cost of Purchase	$25,104	$27,392	$26,944		$79,440
* Jun Ending Invenry = July Budgeted ProdcutionX Pound / Unit X 50% = 4055X2X 50%=4055

Solution-1

Statement Showing Total Cash Receipt for Aug and Sep
	Aug	Sep
cash Sales	$5,400.00	$5,400.00
	(9000*60%)	(9000*60%)
Collection on Crdit sales
Collection for Current Month Sales	$1,872.00	$1,872.00
	(9000*40%*52%)	(9000*40%*52%)
Colelction from last month sales	$1,612.80	$1,296.00
	(11200*40%*36%)	(9000*40%*36%)
Total Cash Receipt	$8,884.80	$8,568.00

Working Note

Sales Budget
	Jul	Aug	Sep
Sales Qty	560	450	450
Selling Price per Unit	$20.00	$20.00	$20.00
Sales	$11,200.00	$9,000.00	$9,000.00