ORIE_350_Homework__11_spring_2007_answers - ORIE 350...

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ORIE 350 Homework #11 Due April 24, 2007 1. Hicks Corporation seeks your assistance with their budget. At July 30, the company has cash of $5,500, A/R of $437,000, inventory of $309,400, and A/P of $133,045. The company has the following policies: i. All sales are billed on the last day of each month. ii. Collections of A/R are: 85% within one month, 9% within two months, the remainder uncollectable. iii. 54% of expenses are paid in the month in which they are incurred, the remainder the following month. iv. Ending inventory (in units) equals 130% of the next month’s sales. v. Cost of goods sold is $20 per unit vi. S, G, & A Expenses, of which $2000 is depreciation, are 15% of the current month’s sales. Actual and projected sales are: Month Sales ($) Sales (units) June 290,000 9,400 July 363,000 12,100 August 357,000 11,900 September 342,000 11,400 October 360,000 12,000 November 366,000 12,200 a. What are the budgeted purchases for August? b. What are the budgeted purchases for September? c. What are the budgeted cash collections for August?
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