Titan manufactures and sells a
Titan manufactures and sells a product. It projects unit salesfor Jan, Feb, March and April of 2500, 2250, 3000, and 3750,respectively. At the end of a month, Titan plans to have finishedgoods inventory equal to 20% of the following month’s sales.
*Make a Monthly production schedule for Jan-March (Titan had 800units of finished goods on hand at the end of December.)
2.) Cubs sales for Jan, Feb, and March are budgeted to be $5000,$4500, and $6000. 60% of sales are on credit with the 40% in cash.The credit collection history shows 30% of collections are in themonth of sale and 70% in the following month. Assuming that thecollection of the $1500 balance in Accounts receivable at the endof December occurs in January, prepare a budget of the total cashreceipts for each month Jan-March.
Answer:
| Ans.1 | TITAN MANUFACTURES | |||||
| ProductionBudget | ||||||
| For the FirstQuarter | ||||||
| Jan. | Feb. | March | ||||
| Unit sales | 2500 | 2250 | 3000 | |||
| Add: Ending inventory | 450 | 600 | 750 | |||
| Total needed | 2950 | 2850 | 3750 | |||
| Less: Beginning inventory | -800 | -450 | -600 | |||
| Units produced | 2150 | 2400 | 3150 | |||
| *Calculation ofending inventory: | *Calculation of beginninginventory: | |||||
| Months | Amount | Months | Amount | |||
| Jan. | 2250*20% | 450 | Jan. | given | 800 | |
| Feb. | 3000*20% | 600 | Feb. | Ending inventory of jan. | 450 | |
| March | 3750*20% | 750 | March | Ending inventory of feb. | 600 | |
| *Ending inventory of previous month is equal to thebeginning inventory of current month. | ||||||
| Ans.2 | CUBS | |||||
| Cash CollectionBudget | ||||||
| For the FirstQuarter | ||||||
| Jan. | Feb. | March | ||||
| Cash sales | 2000 | 1800 | 2400 | |||
| Collection of credit sales: | ||||||
| Balance of december | 1500 | |||||
| 30% of credit sales in month of sales | 900 | 810 | 1080 | |||
| 70% of credit sales in the following month | 2100 | 1890 | ||||
| Total Cash collections | 4400 | 4710 | 5370 | |||
| *Calculation ofcash sales: | ||||||
| 40% of sales | 5000*40% | 4500*40% | 6000*40% | |||
| Cash sales | 2000 | 1800 | 2400 | |||
| *Calculation ofcredit sales: | 5000*60% | 4500*60% | 6000*60% | |||
| Credit sales | 3000 | 2700 | 3600 | |||
| WORKINGNOTES: | ||||||
| Jan. | Feb. | March | ||||
| Balance of december | 1500 | |||||
| 30% of credit sales in month of sales | 3000*30% | 3000*70% | ||||
| 70% of credit sales in the following month | 2700*30% | 2700*70% | ||||
| 3600*30% | ||||||
| *Explanations for January | Balance of december 1500. | |||||
| 30% of january credit sales. | ||||||
| *Explanations for February | 70% of january credit sales | |||||
| 30% of february credit sales. | ||||||
| *Explanations for March | 70% of february credit sales | |||||
| 30% of march credit sales. | ||||||
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