FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Concept explainers
Question
Furniture Island manufactures customized dining tables and is
in the process of preparing its budgets for the next quarter (April,
May and June). To date the following budgeted information has
been compiled for one of its popular products ‘Mode’:
Mode
Budgeted sales (units)
April 3,000
May 5,500
June 3,500
July 4,000
Budgeted selling price per unit: £80
80% of sales are on credit. Credit terms are strictly 30 days. 1%
of all sales will result in
on 31st March were £65,000 (which are all collectible in April).
Material X (kilogrammes) 3 kg
Material planner has provided the following information:
Material X Mode
Opening inventory
(April)
1,000 kg 1,200 units
Closing inventory
(June)
1,800 kg x
Purchase price (per
kilogramme)
£2.50 x
[ACC2003/LAC2003]
[Page 9 of 10]
All purchases are paid in the same month to the supplier.
Management have decided closing stock at the end of each
month should be as follows:
Raw materials: 10% of the next month’s usage
Finished goods: 10% of the next month’s sales.
Fixed overheads are estimated at £5,000 per month and are
paid in the month they were incurred. £1,500 of this amount
relates to
Insurance of £12,500 is due to be paid in April.
Capital Expenditure
April: Computer £148,000
May: Delivery van £280,000
June: Additional Delivery van £230,000
Corporation Tax of £35,900 is due to be paid in May
The opening bank balance is £43,500 overdrawn.
a) Prepare the following budgets for April, May and June:
(i) Sales Budget
(ii)Production Budget in units
(iii) Materials Purchases Budget
b) Prepare the
c) Recommend to the management of Furniture Island at least
three ways of improving their cash position.
Please answer question C
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Please answer fastarrow_forwardFurniture Island manufactures customized dining tables and isin the process of preparing its budgets for the next quarter (April,May and June). To date the following budgeted information hasbeen compiled for one of its popular products ‘Mode’:ModeBudgeted sales (units)April 3,000May 5,500June 3,500July 4,000Budgeted selling price per unit: £8080% of sales are on credit. Credit terms are strictly 30 days. 1%of all sales will result in bad debt. Trade receivables outstandingon 31st March were £65,000 (which are all collectible in April). Material X (kilogrammes) 3 kgMaterial planner has provided the following information:Material X ModeOpening inventory(April)1,000 kg 1,200 unitsClosing inventory(June)1,800 kg xPurchase price (perkilogramme)£2.50 x[ACC2003/LAC2003][Page 9 of 10]All purchases are paid in the same month to the supplier.Management have decided closing stock at the end of eachmonth should be as follows:Raw materials: 10% of the next month’s usageFinished goods: 10% of the…arrow_forwardHiking General Store prepared the following sales budget: MONTH BUDGETED SALES MARCH RM4,000.00 APRIL RM14,000.00 MAY RM12,000.00 JUNE RM16,000.00 The expected gross profit rate is 30% and the inventory at the end of February was RM14,000. Desired inventory levels at the end of the month are 10% of the next month Cost Of Good Sold. Compute the total purchase budgetedfor April for Hiking General Store. Support your answer with explaination.arrow_forward
- Sanjayarrow_forwardNavigator sells GPS trackers for $41 each. It expects sales of 4,900 units in quarter 1 and a 5% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year. Round final answers to nearest whole dollar. Navigator Sales Budget For the Year Ending Dec. 31, 20XX Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Expected Sales (Units) Sales Price per Unit Total Sales Revenue $arrow_forwardMilo Company manufactures beach umbrellas. The company is preparing budgets for the third quarter and assembled the following information: The Marketing Department estimated unit sales as follows for the remainder of the year:July 33,000 October 23,000August 76,000 November 9,500September 45,000 December 10,000The selling price of the beach umbrellas is $15 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern:30% in the month of sale65% in the month following sale5% uncollectibleSales for June totaled $375,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires ending inventory of Gilden equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the…arrow_forward
- Milo Company manufactures beach umbrellas. The company is preparing budgets for the third quarter and assembled the following information: The Marketing Department estimated unit sales as follows for the remainder of the year:July 33,000 October 23,000August 76,000 November 9,500September 45,000 December 10,000The selling price of the beach umbrellas is $15 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern:30% in the month of sale65% in the month following sale5% uncollectibleSales for June totaled $375,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires ending inventory of Gilden equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the…arrow_forwardFRANCORP is preparing budgets for the quarter ending March 31. Budgeted sales for the next 5 months are as follows: January February March April May 16250 units 16950 units 17200 units 18350 units 17900 units The selling price per unit is $15. Determine the total budgeted sales for the month of March. O $195.500 O $200,900 $238,550 O $258,000arrow_forwardBeauty Spa & Co. manufactures a specialised luxury spa that is supplied to five-star hotels around the country. The owner provides you with the following information to prepare its 1st quarter budget: July, August, and September. Budgeted sales are as follows: Month Sales ($) Units Sold May 25,000 250 June 28,000 280 July 30,000 300 August 40,000 400 September 35,000 350 October 37,000 370 Additional information: i) Purchases are budgeted at $5.00 per unit and are paid for in full in the month after purchase. ii) Closing inventory must equal 50% of the next month’s sales. iii) Sales (which are all on credit) are collected as follows: 60% in the month of sale; 30% in the month after the sale; 5% in the second month after the sale. iv) The balance in the bank account as of 30 June is $10,000. Required (show your workings for each question): Prepare a purchases budget (in units and $) for the 1st…arrow_forward
- Cameroon Corp. manufactures and sells electric staplers for $15 each. If 15,000 units were sold in December, and management forecasts 4% growth in sales each month, the number of units of electric stapler sales budgeted for February should be: Multiple Choice 15,000 16,873 15,600 16,224 16,500arrow_forwardBeauty Spa & Co. manufactures a specialised luxury spa that is supplied to five-star hotels around the country. The owner provides you with the following information to prepare its 1st quarter budget: July, August, and September. Budgeted sales are as follows: Month Sales ($) Units Sold May 25,000 250 June 28,000 280 July 30,000 300 August 40,000 400 September 35,000 350 October 37,000 370 Additional information: i) Purchases are budgeted at $5.00 per unit and are paid for in full in the month after purchase. ii) Closing inventory must equal 50% of the next month’s sales. iii) Sales (which are all on credit) are collected as follows: 60% in the month of sale; 30% in the month after the sale; 5% in the second month after the sale. iv) The balance in the bank account as of 30 June is $10,000. Required (show your workings for each question): Prepare the schedule of expected cash collections from…arrow_forwardDhapaarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education