Notice from part 1 that ending raw material in december was

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Reference no: EM13568698

The December 2013 sales were $180,000. The company's budgeted unit sales are as follows.

Budgeted unit Sales

January 100,000

February 110,000

March 135,000

April 140,000

May 145,000

Sales price per unit is $2.

Sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible.

Notice from part 1 that ending raw material in December was 0, thus beginning raw materials inventory for January 2014 is 0. The company is planning to implement a policy where end-of-month raw materials inventory is expected to be 100% of the following month's unit sales, plus 40% of the second following month's sales. The company's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase and 60% in the month following purchase. Purchase cost for the raw materials is 33 cents per unit.

Required:

Prepare a budgeted raw material purchase for January, February, March 2014
Prepare a schedule of expected cash payments for the raw materials for January, February, March 2014. (Note: from part 1, the company made a $70,000 raw material purchase).
Prepare a schedule of expected cash collections from customers for January, February, March 2014

Reference no: EM13568698

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