Country Heather manufactures flower pots. It expects to sell 26,000 pots in 2014
ID: 2425067 • Letter: C
Question
Country Heather manufactures flower pots. It expects to sell 26,000 pots in 2014. The company had enough beginning inventory of direct materials to produce 8,000 pots and wants to maintain an ending direct materials inventory to produce 12,000 pots. Beginning inventory of finished pots totaled 2,000 pots and the company had a desired ending inventory of finished pots of 3,000 pots. The pots sell for $12 each. Direct material cost is $2.50 per pot, direct labor cost is $1.35 per pot, and factory overhead is 85¢ per pot.
Determine the budgeted sales for 2014 (in $)
Determine the budgeted production for 2014 (in pots)
Determine the budgeted cost of goods sold for 2014 (in $)
Determine the budgeted cost for DM, DL, & FOH for 2014.
Problem 2
Maddox Co's forecast of sales is as follows: October $40,000; November $80,000; December $120,000. Sales are 70% cash and 30% credit in any month. Credit sales are collected in full in the following month.
Determine the budgeted cash receipts for each of the 3 months?
Calculate the balance of Accounts Receivable on October 31 & November 30?
Explanation / Answer
Solution
Problem 1 :-
1) Budgeted Sale for 2014 in $
= Expected pots sell in 2014 x price per pots
= 26000 pots x $ 12
= $ 312000
So , Budgeted Sale for 2014 = $ 312000
2) Budgeted Production for 2014 in pots
Budgeted Production in 2014 = Budgeted sale in 2014 – Op stock of pots + Closing Stock
of pots
= 26000 – 2000 + 3000
= 27000 pots
3) Cost of good Sold
Total cost of production of one pot include following expenses :-
Total cost of production per pot = Direct Material + Direct Labour + Factory Overhead
= 2.50 + 1.30 + 0.85
= $ 4.65 Per pot
So, the cost of sold for 2014 = Units of pot sold x cost of production per pot
= 26000 x $ 4.65
= $ 120900
4) The budgeted Production Units of pots in 2014 is 27000 pots So, Budgeted Cost for Following Expenses are as follows :-
Direct material cost = 27000 x $ 2.50 = $67500
Direct labour cost = 27000 x $1.30 = $35100
Factory Overheads = 27000 x 0.85 = $22950
Problem 2
Maddox Company Budgeted Cash Receipt For Each of the Following month are :-
Particulars
Amt $
1, Receiving 70% as a cash sale of the current month i.e $40000 x 70%
28000
28000
Particulars
Amt $
56000
12000
68000
Particulars
Amt $
84000
24000
108000
The Balance of accounts Recievable on Following Dates are:-
Particulars
Amt $
1, Receiving 70% as a cash sale of the current month i.e $40000 x 70%
28000
28000