Chapter 4, Problem 23P

The Volt Battery Company has forecast its sales in units as follows:

Volt Battery always keeps an ending inventory equal to 110 percent of the next month’s expected sales. The ending inventory for December (January’s beginning inventory) is 1,460 units, which is consistent with this policy.

Materials cost $\text{\$14}$ per unit and are paid for in the month after purchase. Labor cost is $\text{\$7}$ per unit and is paid in the month the cost is incurred. Overhead costs are $\text{\$8,500}$ per month. Interest of $\text{\$8,500}$ is scheduled to be paid in March, and employee bonuses of $\text{\$13,700}$ will be paid in June.

Prepare a monthly production schedule and a monthly summary of cash payments for January through June. Volt produced 1,100 units in December.