Crane Products, a rapidly growing distributor of home gardening equipment, is fo
ID: 2564365 • Letter: C
Question
Crane Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast.
Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information.
Crane maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $50,300.
Prepare the purchases budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.)
April
May
June
Total Purchases
April COGS
May COGS
June COGS
Month Sales Month Sales January $903,800 July $1,501,000 February $1,001,200 August $1,501,000 March $903,800 September $1,604,500 April $1,150,300 October $1,604,500 May $1,252,100 November $1,501,000 June $1,407,500 December $1,700,900Explanation / Answer
Solution:
Purchase Budget
Purchases Budget
April
May
June
Quarter
April Cost of Goods Sold (1150,300*40% = $460,120)
$138,036
(460,120*30%)
May Cost of Goods Sold (1252,100*40% = $500,840)
$350,588
(500840*70%)
$150,252
(500840*30%)
June Cost of Goods Sold (1407500*40% = $563,000)
$394,100
(563,000*70%)
$168,900
(563,000*30%)
July Cost of Goods Sold (1501,000*40% = $600,400)
$420,280
(600,400*70%)
Total Purchases
$488,624
$544,352
$589,180
$1,622,156
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Purchases Budget
April
May
June
Quarter
April Cost of Goods Sold (1150,300*40% = $460,120)
$138,036
(460,120*30%)
May Cost of Goods Sold (1252,100*40% = $500,840)
$350,588
(500840*70%)
$150,252
(500840*30%)
June Cost of Goods Sold (1407500*40% = $563,000)
$394,100
(563,000*70%)
$168,900
(563,000*30%)
July Cost of Goods Sold (1501,000*40% = $600,400)
$420,280
(600,400*70%)
Total Purchases
$488,624
$544,352
$589,180
$1,622,156