What is the production cash outflow for the month of September 2014 production?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ee 412.

Transcribed Image Text:Production cash outflow. California Cement Company produces its products two months in advance of anticipated
sales and ships to warehouse centers the month before sale. The inventory safety stock is 20% of the anticipated
month's sale. Beginning inventory in September 2014 was 32,637 units. Each unit costs $2.87. The average sales
price per unit is $5.81. The cost is made up of 32% labor, 62% materials, and 6% shipping (to the warehouse). The
company pays for labor the month of production, shipping the month after production, and raw materials the month prior
to production. What is the production cash outflow for products produced in the month of September 2014, and in what
months does it occur? Note: September production is based on November anticipated sales. The following are the
fourth-quarter sales for 2014: $1,795,000 (October), $1,623,000 (November), and $2,066,000 (December).
What is the production cash outflow for the month of September 2014 production?
The labor cost is $. (Round to the nearest dollar.)
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