Bigelow company | Business & Finance homework help
Bigelow Company has just begun business and needs to generate a sales forecast (in units) for their first quarter of operations. Sales forecast for the Bigelow Company are:
a. Ending finished goods inventory should be equal to one half of next month’s sales projection.
b. Each unit requires 3 pounds of material at a cost of $5 per pound.
c. Labor cost is $10 per unit produced.
d. Ending raw material inventory should be equal to twenty percent of next months material requirement.
e. Factory overhead is $25,000 per month of which $10,000 is for depreciation.
f. All costs are paid in the month incurred except purchases which are paid in the following month.
g. Selling Price per unit is $50. All sales are on account with collections estimated at 10% in the month of sale, 60% the month following the sale, 25% the second following month and 5% are uncollectable.
h. Bigelow began the business with $50,000 in cash and requires an ending cash balance of at least $5,000. Bigelow can borrow money from a local bank in $1,000 increments at an interest rate of 1% per month.
1. Prepare a sales budget for Jan. through March
2. Prepare a production budget for Jan. through March.
3. Prepare a purchases budget for Jan. through March.
4. Prepare a cash budget for Jan. through March.
Repeat requirements 1-4 for each of the following four assumptions. ( A total of 5 cash budgets).
Ending Finished Goods Ending Raw Material Raw Material Cost
Inventory Inventory per pound
A. 20% 20% $6
B. 30% 30% $4
C. 40% 50% $5
D. 10% 10% $3
use: Managerial Accounting 14E- Garrison, Noreen, Brewer book