Shredder Manufacturing has the following projected unit sales (at Rs. 18 per unit) for four months of operations: (20) January 25,000 February 30,000 March 32,000 April 35,000 Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay. It takes 2 pounds of raw material (costing Rs. 0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 34,000 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month. Each unit of product requires 0.5 hours of labor time. Labor is paid Rs. 15 per hour and is paid in the same month as worked. Overhead is estimated to be Rs. 2 per unit plus Rs. 25,000 per month (including depreciation of Rs. 12,000). Overhead costs are paid as incurred. Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG. Prepare a sales budget for January, February, and March. Prepare a production budget for January, February, and March. Prepare a purchases budget for January, February, and March.
Shredder Manufacturing has the following projected unit sales (at Rs. 18 per unit) for four months of operations: (20)
|
January |
25,000 |
|
February |
30,000 |
|
March |
32,000 |
|
April |
35,000 |
Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay.
It takes 2 pounds of raw material (costing Rs. 0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 34,000 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month.
Each unit of product requires 0.5 hours of labor time. Labor is paid Rs. 15 per hour and is paid in the same month as worked.
Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG.
- Prepare a sales budget for January, February, and March.
- Prepare a production budget for January, February, and March.
- Prepare a purchases budget for January, February, and March.
- Prepare a direct labor budget for January, February, and March.
- Prepare an overhead budget for January, February, and March.
- Prepare a cash receipts schedule for sales and a cash payments schedule for material
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
