Assume a company’s sales budget for April and May is 31,000 units and 33,000 units, respectively. Its production budget for the same two months is 28,000 units and 29,000 units, respectively. Each unit of finished goods required 6 pounds of raw materials. The company always maintains raw materials inventory equal to 30% of the following months production needs. Also assume the company pays $2.00 per pound of raw material. It always pays for 60% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $131,000. What would be the accounts payable balance at the end of April?
Assume a company’s sales budget for April and May is 31,000 units and 33,000 units, respectively. Its production budget for the same two months is 28,000 units and 29,000 units, respectively. Each unit of finished goods required 6 pounds of raw materials. The company always maintains raw materials inventory equal to 30% of the following months production needs. Also assume the company pays $2.00 per pound of raw material. It always pays for 60% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $131,000. What would be the accounts payable balance at the end of April?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...
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Assume a company’s sales budget for April and May is 31,000 units and 33,000 units, respectively. Its production budget for the same two months is 28,000 units and 29,000 units, respectively. Each unit of finished goods required 6 pounds of raw materials. The company always maintains raw materials inventory equal to 30% of the following months production needs.
Also assume the company pays $2.00 per pound of raw material. It always pays for 60% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $131,000. What would be the accounts payable balance at the end of April?
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