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 6,400 units June 8,400 units April 7,000 units July 9,300 units May 10,000 units August 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 6,400 units June 8,400 units

April 7,000 units July 9,300 units

May 10,000 units August 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.

e. Prepare a schedule of cash payments for materials, by month and in total, for the second
quarter of 2019. (Do not round intermediate calculations.)
X Answer is not complete.
Cash payments for:
April
May
June
Total
March purchases
60,672
April purchases
May purchases
June purchases
Total cash payments
60,672
$
2$

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