Question

Scooter Corp. has forecast sales as follows: July, 30,000 units; August, 35,000 units; and

September, 40,000 units. Finished goods inventory as of July I is forecast to be 10,000

units. Finished goods inventory of 20% of the following month's sales needs is desired.

Each finished unit requires 5 pounds of raw material. The raw materials inventory level on

July I was 2,02,500 pounds and the expected raw materias inventory level on July 31 will

be 2,70,000 pounds.​

Answer 1

Answer: This  chapter  explains how budgeting plays a key role in planning, controlling, and decision mak-ing,  as  well  as  improving  communication  and  coordination.  The  chapter  focuses  on  the  master budget  and  identifies  its  major  components.  The  process  of  preparing  a  set  of  operating  and  fi-nancial budgets for the budget period is described with the emphasis on the interrelationships of the various budgets. The chapter concludes by describing budgets for merchandising and service firms.

Step-by-step explanation:

STEP:1 SCOOTER CORP $10,000 20,000 30,000 60,000x Selling price per unit 30 30 30 30Total Sales 300,000 600,000 900,000 1,800,000$

b) Schedule of expected cash collections:

July August September

Quarter

Total

June sales ($200,000 X 30%) $60,000 $60,000

July sales ($300,000 X 70%,

30%) $210,000 $90,000 300,000

August sales ($600,000 X 70%,

30%) 420,000 $180,000 600,000

September sales ($900,000 X

70%) 630,000 630,000

Total cash collections $270,000 $510,000 $810,000 $1,590,000

c) Account Receivable as of September 30:

From September ($900,000 X 30%) = $270,000

STEP:2a) Ending inventory:

Since the ending inventory level must equal 10% of the next month’s sales, the

ending inventory for the month of June must be 10% of July’s sales of 30,000

or 3,000 units.

b) Production Budget

July August September

Quarter

Total October

Budgeted sales in units 30,000 45,000 60,000 135,000 50,000

+ ending inventory 4,500 6,000 5,000 5,000

= Total needs 34,500 51,000 65,000 140,000

- beginning inventory 3,000 4,500 6,000 3,000 5,000

= Required production 31,500 46,500 59,000 137,000

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