Clay Company Has Projected Sales and Production in Units for the Second

question 101

Essay

Clay Company has projected sales and production in units for the second quarter of the coming year as follows:
Cash-related production costs are budgeted at $5 per unit produced.Of these production costs,40% are paid in the month in which they are incurred and the balance in the following month.Selling and administrative expenses will amount to $100,000 per month.The accounts payable balance on March 31 totals $190,000,which will be paid in April.
All units are sold on account for $14 each.Cash collections from sales are budgeted at 60% in the month of sale,30% in the month following the month of sale,and the remaining 10% in the second month following the month of sale.Accounts receivable on April 1 totalled $500,000 ($90,000 from February's sales and the remainder from March).
Required:
a)Prepare a schedule for each month showing budgeted cash disbursements for Clay Company.
b)Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

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Definitions:

Closed-Loop

Closed-Loop refers to a system or process that uses feedback to control states or outputs, aiming for stable operation and error correction.

Open-Loop System

A control mechanism that operates without using feedback to adjust its input based on the outputs.

More Complex

Referring to a system or process that has a greater level of intricacy or difficulty.

Servo Drive

A special electronic amplifier used to power and control servomechanisms, providing precise control of angular or linear position, velocity, and acceleration.