Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need toborrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $44,000 starting March 1. Thebank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31.In considering the loan, the bank requested a projected income statement and cash budget for March.The following information is available:●●• The inventory of finished goods on February 1 was 2,600 units. The desired finished goods inventory at the end of each monthequals 25 percent of sales anticipated for the following month. There is no work in process.The inventory of raw materials on February 1 was 2,380 pounds. At the end of each month, the raw materials inventory equals noless than 20 percent of production requirements for the following month. The company purchases materials in quantities of 260pounds per shipment.Selling expenses are 6 percent of gross sales. Administrative expenses, which include depreciation of $850 per month on officefurniture and fixtures, total $69,600 per month.The manufacturing budget for the utensil, based on normal production of 13,000 units per month, follows.●The company budgeted sales at 14,000 units per month in February, April, and May and at 11,000 units in March. The selling priceis $62 per unit.The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of creditsales.●Materials (pound per utensil, 6,500 pounds, $30 per pound)LaborVariable overheadFixed overhead (includes depreciation of $24,000)Total$ 195,000122,00062,000122,000$ 501,000Required:a-1. Prepare schedules computing inventory budgets by months for production in units for February, March, and April.a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for February and March.b. Prepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unit timesthe number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that 40 percent of sales are cashsales. a-1. Prepare schedules computing inventory budgets by months for production in units for February, March, and April.a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for February and March.b. Prepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unit timesthe number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that 40 percent of sales are cashsales.Complete this question by entering your answers in the tabs below.Required A1 Required A2 Required BPrepare schedules computing inventory budgets by months for production in units for February, March, and April.Total needsBudgeted production - UnitsLane ProductsProduction Schedule Budget (Units)For February, March, and April< Required A1February00MarchRequired A200April00

Production and material budgeting entails planning and allocating resources for manufacturing…

Required: a-1. Prepare schedules computing inventory budgets by months for production in units for February, March, and April. a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for February and March. b. Prepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unit times the number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that 40 percent of sales are cash

Required: a-1. Prepare schedules computing inventory budgets by months for production in units for February, March, and April. a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in pounds for February and March. b. Prepare a projected income statement for March. Cost of goods sold should equal the variable manufacturing cost per unit times the number of units sold plus the total fixed manufacturing cost budgeted for the period. Assume that 40 percent of sales are cash

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $600,000 starting May 1. The bank would charge interest at the rate of 1.25 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May. The following information is available: The company budgeted sales at 650,000 units per month in April, June, and July and at 500,000 units in May. The selling price is $4 per unit. The inventory of finished goods on April 1 was 162,500 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process. The inventory of raw materials on April 1 was 61,250 pounds. At the end of each month, the raw materials inventory equals no less than…
Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $500,000 starting May 1. The bank would charge interest at the rate of 1.25 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May. The following information is available: W . The company budgeted sales at 600,000 units per month in April, June, and July and at 450,000 units in May. The selling price is $4 per unit. . The inventory of finished goods on April 1 was 150,000 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process. . The inventory of raw materials on April 1 was 42,188 pounds. At the end of each month, the raw materials inventory equals no less…
Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $60,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: The company budgeted sales at 22,000 units per month in February, April, and May and at 19,000 units in March. The selling price is $70 per unit. The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. The inventory of finished goods on February 1 was 3,400 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the…
Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $60,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: • The company budgeted sales at 22,000 units per month in February, April, and May and at 19,000 units in March. The selling price is $70 per unit. • The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. • The inventory of finished goods on February 1 was 3,400 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the…
Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $44,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: ● ● ● ● The company budgeted sales at 14,000 units per month in February, April, and May and at 11,000 units in March. The selling price is $62 per unit. The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. The inventory of finished goods on February 1 was 2,600 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the…
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