Question

The Volt Battery Company has forecast its sales in units as follows January February March ril 3,100 May 2,950 June 2,900 July 3,400 3,650 3,800 3,500 Volt Battery always keeps an ending inventory equal to 130% of the next month's expected sales. The ending inventory for December (January's beginning inventory) is 4,030 units, which is consistent with this policy Materials cost $14 per unit and are paid for in the month after purchase. Labor cost is $7 per unit and is paid in the month the cost is incurred. Overhead costs are $17,500 per month. Interest of $10,300 is scheduled to be paid in March, and employee bonuses of $15,500 will be paid in June a. Prepare a monthly production schedule for January through June Volt Battery Company Summary of Cash Payments January February March April May June UI Projected unit sales Desired ending inventory Total units required Beginning inventory Units to be produced b. Prepare a monthly summary of cash payments for January through June. Volt produced 2,900 units in December. Volt Battery Company Summary of Cash Payments December January February March April May June Units produced Material cost Labor cost Overhead cost Interest Employee bonuses Total cash payments

Answer 1

Volt Battery compan Monthly Production Schedule for Tanuarv to June: Particulars Projected unit sales Add: Desired ending inventory Total Units Required Less: Beginning inventory Units to be Produced January February March April May June July 2,950 3,770 6,720 3,400 4,745 8,145 3,650 4,940 8,590 3,500 3,100 3,835 6,935 (4,030 (3,835) (3,770) (4,420 ,745 (4,940) 2,905 2,900 4,420 7,320 3,800 4,550 8,350 2,885 3,550 3,725 3,845 3,410 Summary of Cash Pavments :- Particulars Units Produced December January February March April May June 2,900 2,905 2,885 3,550 3,725 3,845 3,410 Material cost @14 per unit Labor cost @7 per unit Overhead cost Interest cost Employee Bonus Total Cash Payments 40,600 40,670 40,39049,700 52,150 53,830 20,300 20,335 20,195 24,850 26,075 26,915 23,870 17,500 17,500 17,50017,500 17,500 17,500 17,500 10,300 15,500 37,800 78,435 78,365 93,040 93,275 96,565110,700