Question

Clay Corporation has projected sales and production in units for the second quarter of the coming year as follows: Sales Production April 54,000 62.000 May 44,000 52.000 June 64.000 52.000 Required: a. Cash-related production costs are budgeted at $5.4 per unit produced. Of these production costs, 35% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $140,000 per month. The accounts payable balance on March 31 totals $230,000, which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Clay Corporation. April May June Production cost Cash disbursement: Production costs this month Production costs prior month Selling and administrative Total disbursements b. Assume that all units are sold on account for $14.4 each. Cash collections from sales are budgeted at 55% in the month of sale, 25% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. Accounts receivable on April 1 totaled $544,000 ($94,000 from February's sales and $450,000 from March's sales) Prepare a schedule for each month showing budgeted cash receipts for Clay Corporation. (Do not round intermediate calculations.) April May June Total sales Cash receipts: February sales March sales April sales May sales June sales Total receipts $ 0 $ 0 $ 0

Answer 1

Produstion Cost Apail () May ($) June. ($) broduetion units. 62000 52000 52000 produetion scost per unit $5.4 $5.4 280800 production lost 280800 334800 (production units X produetion cost per Vnit 98 280 production Costs 117180 a thio menth Lash 182520 praduetion lest frior monthr. 217620 Budgeted Cash 2isburisement fer Clay Corporation ApsilU May ($) June ( 334800 280800 280 800 production Cost Cash dlis bursement production Costs this month, 117180 98280 98280 Production Costs priee 217620 182520 month Selling and administratire 140,000 140,000 140,000 Accounts payable 230,000 Tetal diskursement 487180 455900 420800 nedHat

"Tetal Sales . May.($) June. ($) April.($) Sales in Vrits 64000 244000 54000 Sales price fero Unit $14.4 $19-4 $14.4 921600 Total Sales. 633 600 7子7600 ates B cest 506 880 34 8480 427680 Sales this month (551) Sales prior month. (25%) 158400 194400 155520 Sales prior month. (20%) 427680 342880 820 800 Budgeted lash Reccipl5 foro Clay Coopoorition Aprülf) May ($) June l$) 777600 633600 921600 Tatal Sales. Cash receipts February Sales.94000 Mareh Sales, 450,00 April Sales. May Sales. Jrune Sales 42千680 542880 820800 Tatal Meceipts, 971680 542880 820800