Soprano Co. is in the process of preparing the second quarter budget for 2019, and the following data have been assembled: • The company sells a single product at a selling price of $45 per unit. The estimated sales volume for the next six months is as follows: March April May 6,400 units 7,000 units 10,000 units June July August 8,400 units 9,300 units 6,100 units • All sales are on account. The company's collection experience has been that 42% of a month's sales are collected in the month of sale, 51% are collected in the month following the sale, and 7% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $146,880 on March 31, 2019. • Management's policy is to maintain ending finished goods inventory each month at a level equal to 51% of the next month's budgeted sales. The finished goods inventory on March 31, 2019, is expected to be 3,570 units. • To make one unit of finished product, 5 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 43% of the next month's estimated usage. The raw materials inventory is expected to be 18,340 pounds on March 31, 2019. • The cost per pound of raw material is $6.00, and 73% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable balance for raw material purchases is expected to be $60,672 on March 31, 2019.
Soprano Co. is in the process of preparing the second quarter budget for 2019, and the following data have been assembled: • The company sells a single product at a selling price of $45 per unit. The estimated sales volume for the next six months is as follows: March April May 6,400 units 7,000 units 10,000 units June July August 8,400 units 9,300 units 6,100 units • All sales are on account. The company's collection experience has been that 42% of a month's sales are collected in the month of sale, 51% are collected in the month following the sale, and 7% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $146,880 on March 31, 2019. • Management's policy is to maintain ending finished goods inventory each month at a level equal to 51% of the next month's budgeted sales. The finished goods inventory on March 31, 2019, is expected to be 3,570 units. • To make one unit of finished product, 5 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 43% of the next month's estimated usage. The raw materials inventory is expected to be 18,340 pounds on March 31, 2019. • The cost per pound of raw material is $6.00, and 73% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable balance for raw material purchases is expected to be $60,672 on March 31, 2019.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
100%
Transcribed Image Text:Answer is complete and correct.
April
Мay
June
Total
Expected sales in units
7,000
10,000
8,400
25,400
Selling price per unit
$
$ 315,000
45
$
45
2$
45
45
Total sales
$
450,000
$
378,000
$ 1,143,000
b. Prepare a schedule of cash collections from sales, by month and in total, for the second quarter of 2019.
X Answer is not complete.
Cash collections from:
April
Мay
June
Total
March sales
146,880
April sales
May sales
June sales
Total cash collections
146,880
$
0 $
Transcribed Image Text:Soprano Co. is in the process of preparing the second quarter budget for 2019, and the following data have been assembled:
• The company sells a single product at a selling price of $45 per unit. The estimated sales volume for the next six months is as
follows:
6,400 units
7,000 units
10,000 units
8,400 units
9,300 units
6,100 units
March
April
Мay
June
July
August
• All sales are on account. The company's collection experience has been that 42% of a month's sales are collected in the month of
sale, 51% are collected in the month following the sale, and 7% are uncollectible. It is expected that the net realizable value of
accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $146,880 on March 31, 2019.
Management's policy is to maintain ending finished goods inventory each month at a level equal to 51% of the next month's
budgeted sales. The finished goods inventory on March 31, 2019, is expected to be 3,570 units.
• To make one unit of finished product, 5 pounds of materials are required. Management's policy is to have enough materials on hand
at the end of each month to equal 43% of the next month's estimated usage. The raw materials inventory is expected to be 18,340
pounds on March 31, 2019.
• The cost per pound of raw material is $6.00, and 73% of all purchases are paid for in the month of purchase; the remainder is paid
in the following month. The accounts payable balance for raw material purchases is expected to be $60,672 on March 31, 2019.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education