Problem 1: A: A company had sales of $250,000 during the 4th quarter of last yea
ID: 2526276 • Letter: P
Question
Problem 1:
A:
A company had sales of $250,000 during the 4th quarter of last year. They expect sales to increase by 15% in the 1st quarter of next year. How much should we budget for 1st Quarter sales?
B:
Hike N' Run makes running socks. We budget sales for the 1st Quarter at 76,800 pairs and 2nd Quarter at 62,400 pairs and plan to maintain 50% of next quarter's sales in Ending Finished Goods Inventory. December 31 finished goods inventory is estimated at 38,400 pairs of socks. How many sock pairs do we need to produce in 1st Quarter?
C:
Sales are all made on credit. We expect to receive 70% of the sales in the quarter of the sales and the remaining 30% in the quarter after the sale. Accounts Receivable at the end of December last year is $40,000. Budgeted sales include: 1st Quarter $320,000, 2nd Quarter $350,000, 3rd Quarter $400,000 and 4th Quarter $380,000. Determine the amount of cash we expect to receive during the 2nd Quarter.
Explanation / Answer
a) Budgeted Sales in 1st quarter = 250000*1.15 = 287500
b) Produce in 1st quarter = 76800+(62400*50%)-38400 = 69600 sock pairs
c) Cash received in 2nd quarter = (320000*30%+350000*70%) = 341000