GreenThumb Organic Fertilizer Company plans to sell 220,000 units of finished product in July and anticipates a growth rate in sales of 4 percent per month. The desired monthly ending inventory in units of finished product is 75 percent of the next month's estimated sales. There are 165,000 finished units in inventory on June 30. Each unit of finished product requires 6 pounds of raw material at a cost of $2.05 per pound. There are 850,000 pounds of raw material in inventory on June 30. Required: 1. Compute the company's total required production in units of finished product for the entire three-month period ending September 30. Note: Round all intermediate calculations and your final answer to the nearest unit. 2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three- month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30. 1. Total required production in units 2. Total estimated cost
GreenThumb Organic Fertilizer Company plans to sell 220,000 units of finished product in July and anticipates a growth rate in sales of 4 percent per month. The desired monthly ending inventory in units of finished product is 75 percent of the next month's estimated sales. There are 165,000 finished units in inventory on June 30. Each unit of finished product requires 6 pounds of raw material at a cost of $2.05 per pound. There are 850,000 pounds of raw material in inventory on June 30. Required: 1. Compute the company's total required production in units of finished product for the entire three-month period ending September 30. Note: Round all intermediate calculations and your final answer to the nearest unit. 2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three- month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30. 1. Total required production in units 2. Total estimated cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:GreenThumb Organic Fertilizer Company plans to sell 220,000 units of finished product in July and anticipates a growth rate in sales
of 4 percent per month. The desired monthly ending inventory in units of finished product is 75 percent of the next month's estimated
sales. There are 165,000 finished units in inventory on June 30. Each unit of finished product requires 6 pounds of raw material at a
cost of $2.05 per pound. There are 850,000 pounds of raw material in inventory on June 30.
Required:
1. Compute the company's total required production in units of finished product for the entire three-month period ending September
30.
Note: Round all intermediate calculations and your final answer to the nearest unit.
2. Independent of your answer to requirement 1, assume the company plans to produce 700,000 units of finished product in the three-
month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25
percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period
ending September 30.
1. Total required production in units
2. Total estimated cost
![!
Required information
[The following information applies to the questions displayed below.]
Sound Investments, Incorporated, is a large retailer of stereo equipment. The controller is about to prepare the
budget for the first quarter of 20x2. Past experience has indicated that 75 percent of the store's sales are cash sales.
The collection experience for the sales on account is as follows:
80 percent during month of sale
15 percent during month following sale
5 percent uncollectible
The total sales for December 20x1 are expected to be $208,000. The controller feels that sales in January 20x2 could
range from $118,000 to $178,000.
Required:
1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for three different levels of January
sales. Use the following columnar format.
Cash receipts in January 20x2:
From December sales on account
From January cash sales
From January sales on account
Total Sales in January, 20x
118,000 $
148,000
178,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F22a88d94-b338-40a5-92dd-03b573781115%2Fdca18aec-997a-498b-a821-a18f2eb7dbe5%2Fukfw04m_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Sound Investments, Incorporated, is a large retailer of stereo equipment. The controller is about to prepare the
budget for the first quarter of 20x2. Past experience has indicated that 75 percent of the store's sales are cash sales.
The collection experience for the sales on account is as follows:
80 percent during month of sale
15 percent during month following sale
5 percent uncollectible
The total sales for December 20x1 are expected to be $208,000. The controller feels that sales in January 20x2 could
range from $118,000 to $178,000.
Required:
1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for three different levels of January
sales. Use the following columnar format.
Cash receipts in January 20x2:
From December sales on account
From January cash sales
From January sales on account
Total Sales in January, 20x
118,000 $
148,000
178,000
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