Tony Stark and Company has projected sales and production in units for the second quarter of the coming year as follows: Sales Production April 50,000 May June 40,000 60,000 60,000 50,000 50,000 Cash-related production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $200,000, which will be paid in April. All units are sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $500,000 ($100,000 from February's sales and the remainder from March). Submission Instructions a. Prepare a schedule for each month showing budgeted cash disbursements for Clay Company. b. Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

Tony Stark and Company has projected sales and production in units for the second quarter of the coming year as follows: Sales Production April 50,000 May June 40,000 60,000 60,000 50,000 50,000 Cash-related production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $200,000, which will be paid in April. All units are sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $500,000 ($100,000 from February's sales and the remainder from March). Submission Instructions a. Prepare a schedule for each month showing budgeted cash disbursements for Clay Company. b. Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 10Q: If the sales forecast estimates that 50,000 units of product will be sold during the following year,...

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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

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Tony Stark and Company has projected sales and production in units for the second quarter of the coming year as follows:
Sales
Production
April
50,000
May
40,000
60,000 50,000
June
60,000
50,000
Cash-related production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in
which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000
per month. The accounts payable balance on March 31 totals $200,000, which will be paid in April.
All units are sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the
month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts
receivable on April 1 totaled $500,000 ($100,000 from February's sales and the remainder from March).
Submission Instructions
a. Prepare a schedule for each month showing budgeted cash disbursements for Clay Company.
b. Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

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