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

question 68

Essay

Marino Company has projected sales and production in units for the second quarter of the year as follows: $$\begin{array} { | l | c | c | c | } \hline & \text { April } & \text { May } & \text { June } \\\hline \text { Sales } & 30,000 & 20,000 & 25,000 \\\hline \text { Production } & 25,000 & 25,000 & 30,000 \\\hline\end{array}$$
Required:
a.Cash production costs are budgeted at $6 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.Marketing and administrative expenses (all paid in cash)amount to $60,000 per month.The accounts payable balance on March 31 totals $96,000,all of which will be paid in April.Prepare a schedule for each month showing budgeted cash disbursements for Marino Company.b.Assume that all units will be sold on account for $15 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 March 31 totaled $255,000 ($45,000 from February's sales and the remainder from March. )Prepare a schedule for each month showing budgeted cash receipts for Marino Company.

---

Definitions:

Sales Returns

Sales returns are transactions where customers return previously purchased merchandise back to the seller, often due to defects or dissatisfaction, leading to a reversal of sale revenue.

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and thus considers as a loss.

Effective Interest Rate

The real rate of interest earned or paid on an investment, loan, or other financial product adjusted for compounding over a given period.

Present Value

The value today of a future cash amount or series of payments, based on a particular rate of return.