Greener Grass Fertilizer Company plans to sell 230,000 units of finished product in July and anticipates a growth rate in sales of 4 percent per month. The desired monthly ending inventory in units of finished product is 80 percent of the next month's estimated sales. There are 184,000 finished units in inventory on June 30. Each unit of finished product requires 4 pounds of raw material at a cost of $1.85 per pound. There are 780,000 pounds of raw material in inventory on June 30.
- Compute the company's total required production in units of finished product for the entire three-month period ending September 30. (Round all intermediate calculations and your final answer to the nearest unit.)
- Independent of your answer to requirement (1), assume the company plans to produce 720,000 units of finished product in the three-month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30.
Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the company's accounting records:
- All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 35 percent are collected in the following month. Uncollectibles amounting to 5 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1.
- Seventy percent of the merchandise purchases are paid for in the month of purchase; the remaining 30 percent are paid for in the month after acquisition.
- The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $90,000; accounts receivable, $235,000; and accounts payable, $80,000.
- Mary and Kay, Inc. maintains a $90,000 minimum cash balance at all times. Financing is available (and retired) in $1,000 multiples at an 9 percent interest rate, with borrowings taking place at the beginning of the month and repayments occurring at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid at that time.
- Additional data:
- Prepare a schedule that discloses the firm's total cash collections for January through March.
- Prepare a schedule that discloses the firm's total cash disbursements for January through March.
- Prepare a schedule that summarizes the firm's financing cash flows for January through March.
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