29 Jun The treasurer of Unisyms Company has accum
Question
Question 1
Question 1
The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:
March
April
Sales.
$450,000
$520,000
Manufacturing costs
290,000
350,000
Selling and administrative
expenses
41,400
46,400
Capital additions
250,000
—
The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6,400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.
Question 2
Trapp Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows:
August
$100,000
September
185,000
October
225,000
The company expects to sell 40% of its merchandise for cash. Of the sales on account, one third are expected to be collected in the month of the sale and the remainder in the following month.
Prepare a schedule indicating cash collections of accounts receivable for August, September, and October.
Question 3
Diamond Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,700 yards at a cost of $7.60.
Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
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