Generating a monthly production and inventory schedule

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Reference no: EM131793935

Question: Esquire Products Inc. expects the following monthly sales:


January	$	24,000	July	$	18,000
February		15,000	August		22,000
March		8,000	September		25,000
April		10,000	October		30,000
May		4,000	November		38,000
June		2,000	December		20,000
Total sales = $216,000

Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12.

a. Generate a monthly production and inventory schedule in units. Beginning inventory in January is 8,000 units.

b. Prepare a cash receipts schedule for January through December. Assume that dollar sales in the prior December were $20,000

c. Prepare a cash payments schedule for January through December. The production costs ($1 per unit produced) are paid for in the month in which they occur. Other cash payments (besides those for production costs) are $7,000 per month.

d. Construct a cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $3,000, which is also the minimum desired. (Negative amounts should be indicated by a minus sign.)

e. Determine total current assets for each month. Include cash, accounts receivable, and inventory. The accounts receivable for a given month is equal to 60 percent of that month's sales. Inventory is equal to ending inventory (part a) times the cost of $1 per unit.

Reference no: EM131793935

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