The marketing department has estimated sales as follows for the remainder of the year (in pairs of swim fins): The selling price of the swim fins is $50 per pair. July----6,000; August----7,000; September----5,000; October-----4,000; November---3,000; December----3,000.
All sales are on account. Based on past experience, sales are expected to be collected in the following pattern: 40% in the month of sales; 50% in the month following the sale; and 10% uncollectible. The beginning account receivable balance (excluding uncollectible accounts) on July 1 will be $130,000.
The company maintains finished goods inventories equal to 10% of the following month's sales. The inventory of finished goods on July 1 will be 600 pairs.
Each pair of swim fins requires 2 pounds of geico compound. To prevent shortages, the company would like the inventory of geico compound on hand at the end of each month to be equal to 20% of the following month's production needs. The inventory of geico compound on hand on July 1 will be 2.444 pounds.
Geico compound costs $2.50 per pound. Crydon pays for 60% of its purchases in the month of purchase; the remainder is paid for in the following month. The account payable balance for geico compound purchases will be $11.400 on July 1.
Dear Student, Please submit it... View the full answer