Question

Name: ACC213 winter 2019 in-ass (Take Home) #3 Vinal Corporation makes one product and has provided the following Information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit Budgeted unit sales (all on credit) 585 July 9,400 11,700 10,300 11,200 September Raw materials requirement per unit of output 2 pounds 52.00 per pound Raw materials cost Direct labor requirement per unit of output 2.1 direct labor-hours $25.00 per direct labor-hour Direct labor wage rate Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid 20% in the month of purchase 80% in the following month The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 20% of the following month's raw materials production needs. Required: a. What are the budgeted sales for August? b. What are the expected cash collections for August? c. According to the production budget, how many units should be produced in August? d. If 20,960 pounds of raw materials are needed for production in September, how many pounds of raw materials should be purchased in August? e. If the cost of raw material purchases in July is $40,688, then in August what are the total estimated cash disbursements for raw materials purchases? a) b) d)

Answer 1

a) Budgeted sales for August Units Selling Price per unit Budgeted Sales 11,700 85 $994,500 A*B b) Expected cash collection for August Jul Aug Budgeted unit sales Selling Price Budgeted Sales (all on credit) Collection: 30% in same month 70% in following month Cash collection in Au 9,400 11,700 85 $799,000 $994,500 85 $239,700 $298,350 $559,300 $857,650

c) Production Budget for Aug Jul Aug Sep Budgeted Sales in Units 9,400 11,700 10,300 Add:Ending Finished goods inventory equal to 20% of following month's sales Total inventory requirement 2,340 2,060 11,74013,760 Less: Opening Finished goods inventory Production requirement for Au (2,340) 11,420 Jul Aug 11,420 Sep Budgeted Production in Units (A) Raw Material requirement per unit (B) Budgeted Raw material requirement for production (A*B) Add: Ending Raw material inventory equal to 20% of following month's raw material production requirement Total Raw material requirement Less: Opening Raw material inventory Raw material purchase in Aug (in Pounds 2 pounds 22,840 20,960 4,568 4,192 27,032 (4,568) 22,464

e) Nes Aug 22,464 2 Raw material purchases in pounds Raw material cost per pound Raw material purchase cost Cash disbursement: 20% in month of purchase 80% in following month Cash disbursement for Aug $ 40,688 $ 44,923 $ 8,138 8,986 $ 32,550 41,536