E8 Sales $ 897,000

COGS $ 724,500
Gross margin $ 172,500
Selling & administrative expenses $ 139,500
Net operating income $ 33,000
Interest expense $ 14,000
Net income $ 19,000

E 10 1 Jul Aug Sep

Budget unit sales 35000 40000 50000
Units of ending finished inventory 11000 13000 9000
Total unit 46000 53000 59000
Units of beginning finished inventory 10000 11000 13000
Production 36000 42000 46000

2
Because the company has the peak sales on August and September, the company will
produce more so that it has enough units to sell during these two months. It produces
fewer units in September and October because the units of sales start decreasing

3 Jul Aug Sep

Production 36000 42000 46000
Units of raw materials per unit of finished goods 3 3 3
Units of raw materials for production 108000 126000 138000
Units of ending raw materials 63000 69000 42000
Total units of raw materials 171000 195000 180000
Units of beginning raw materials 54000 63000 69000
Units of raw materials needed to purchase 117000 132000 111000

P 19 1 Expected cash collection

Cash sales 60000
Collections of AR on April 30 54000
May sales 96000
Total cash received 210000

2 Expected cash disbursement

April 30 AP 63000
May purchases 60000
Total cash payments 123000

3 Cash budget
Beginning cash balance 9000
Collections 210000
Total cash receives 219000
Cash disbursement 123000
Selling & administrative expenses 72000
Purchase of equipment 6500
Total cash payments 201500
 Excess of cash 17500
Borrowing 20000
Repayments -14500
Interest -100
Total financing 5400
Ending cash balance 22900

4 Budgeted income statement

Sales 220000
COGS 110000
Gross margin 110000
Selling & administrative expenses 74000
Net operating income 36000
Interest expense 100
Net income 35900

5 Budgeted balance sheet

Assets
Cash 22900
AR 64000
Inventory 40000
Building & equipment 211500
Total assets 338400

Liabilities & stockholders' equity

AP 60000
Notes payable 20000
Common stock 180000
Retained earnings 78400
Total liabilities & stockholders' equity 338400
 Oct
30000
7000
37000
9000
28000

he company will
ths. It produces
decreasing

Quarter
124000
3
372000
42000
414000
54000
360000