Compute the value-added ratio

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Question - The Company expects to sell 50% of its merchandise for cash and 50% for sales on account. Of the sales on account, 30% are expected to be collected in the month of the sale and the remainder in the following month.

August

$250,000

September

200,000

October

275,000

Do a schedule indicating cash collections from cash and accounts receivable for the three months.

Based on the following production and sales estimates for May, prepare the sales and production budgets:

Estimated beginning inventory (units), May 1

18,000

Desired ending inventory (units), May 31

21,600

Expected sales volume (units):

 

Area W

6,000

Area X

7,000

Area Y

8,000

$ Unit sales price

$20

Rough Riders Inc. manufactures jeans in the cutting and sewing process. Jeans are manufactured in 50-jean batch sizes. The cutting time is 6 minutes and the sewing time is 15 minutes per jean. It takes 5 minutes to move a batch of jeans from cutting to sewing.

(a) Compute the value-added, non-value-added, and total lead time of this process.

(b) Compute the value-added ratio. Round to one decimal place.

Reference no: EM132351191

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