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Ultravision Inc. anticipates sales of $330,000 from January through April. Materials will represent 50 percent of...

Ultravision Inc. anticipates sales of $330,000 from January through April. Materials will represent 50 percent of sales, and because of level production, material purchases will be equal for each month during the four months of January, February, March, and April.

Materials are paid for one month after the month purchased. Materials purchased in December of last year were $29,000 (half of $58,000 in sales). Labor costs for each of the four months are slightly different due to a provision in the labor contract in which bonuses are paid in February and April. The labor figures are:

January $19,000
February 22,000
March 19,000
April 24,000

Fixed overhead is $15,000 per month.

Prepare a schedule of cash payments for January through April. (Assume the $330,000 of sales occur equally over the four months of January through April, i.e. Monthly sales = $330,000 / 4.)

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Answer #1
Total materials purchases from January through April = Sales From January through April * 50% = 330000 * 50% = 165000
Monthly materials purchases from January through April = Total materials purchases from January through April / 4 = 165000 / 4 = 41250
Ultravision
Cash payment schedule
December January February March April
Monthly materials purchases 29000 41250 41250 41250 41250
    Payments to materials purchases 29000 41250 41250 41250
    Monthly labor cost 19000 22000 19000 24000
    Monthly fixed overhead 15000 15000 15000 15000
Total cash payments 104250 119500 116500 121500
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