Question

FIRed operating expenses Total operating expenses 1,000 9,000 Use this information to complete a variable costing income statement. 7. Smith Company was organized on August 1 of the current year. Projected sales for the next three months are: August September October $250,000 200,000 275,000 The company expects to sell 50% of its merchandise for cash and 50% for sales on account. Of the sales on account, 30% are expected to be collected in the month of the sale and the remainder in the following month. Prepare a schedule indicating cash collections from cash and accounts receivable for the three months. 8. Based on the following production and sales estimates for May, prepare the sales and production budgets: Estimated beginning inventory (units), May 1 Desired ending inventory (units), May 31 Expected sales volume (units): 18,000 21,600 6,000 7,000 8,000 $20 Area W Area X Area Y Unit sales price 9. Rough Riders Inc. manufactures jeans in the cutting and sewing process. Jeans are manufactured in 50-jean batch sizes. The cutting time is 6 minutes and the sewing time is 15 minutes per jean. It takes 5 minutes to move a batch of jeans from cutting to sewing. (a) Compute the value-added, non-value-added, and total lead time of this process. (b) Compute the value-added ratio. Round to one decimal place.

Answer 1

cash collection schedule is prepared for each month which shows how much cash company will receive from its sales of goods.As some of the sale are on account the receipts may be received in next month. it helps in preparing cash budget and maintaining cash balance.

Here, company is organized on August 1 so there will be no accounts receivable of previous months.

	August	September	October
sales	$250,000	$200,000	$275,000
cash sales [50% of sales] (B)	$125,000[250,000*50%]	$100,000[200,000*50%]	$137,500[275,000*50%]
sales on account [50%of sales]	$125,000	$100,000	$137,500
cash receipts from Account receivable of August	$37,500 [$125,000*30%]	$87,500 [125,000*70%]
cash receipts from Account receivable of September		$30,000 [$100,000*30%]	$70,000 [$100,000*70%]
cash receipts from Account receivable of October			$41,250 [137,500*30%]
collection from Accounts receivable (A)	$37,500	$117,500 [87,500+30,000]	$111,250 [70,000+41,250]
Total cash receipts (A)+(B)	$162,500 [125,000+37,500]	$217,500 [117,500+100,000]	$248,750 [137,500+111,250]

30% of sales on account is collected in same month 70% in next month