The controller of Wildhorse Company estimates sales and production for the first four months of 2022 as follows: Sales Production in units January $28,300 900 February March $38,300 $48,400 1,600 2,000 April $23,400 2,300 Sales are 40% cash and 60% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 40% of credit sales are collected. It takes 4 kg of direct materials to produce a finished unit, and direct materials cost $5 per kg. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase and 60% the following month. Ending direct materials inventory for each month is 40% of the next month's production needs. January's beginning materials inventory is 1,150 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.
The controller of Wildhorse Company estimates sales and production for the first four months of 2022 as follows: Sales Production in units January $28,300 900 February March $38,300 $48,400 1,600 2,000 April $23,400 2,300 Sales are 40% cash and 60% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 40% of credit sales are collected. It takes 4 kg of direct materials to produce a finished unit, and direct materials cost $5 per kg. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase and 60% the following month. Ending direct materials inventory for each month is 40% of the next month's production needs. January's beginning materials inventory is 1,150 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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