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1. Number of Units Sold in December

1. Number of Units Sold in December. Note: 40% of sales collected in month of sale, 60% collected in following month Therefore: 60% of December Sales collected in January 60% x December Sales = $ 108,000 December Sales = $108,000 / 60% = $180,000

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1. Number of Units Sold in December

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  1. 1. Number of Units Sold in December Note: 40% of sales collected in month of sale, 60% collected in following month Therefore: 60% of December Sales collected in January 60% x December Sales = $ 108,000 December Sales = $108,000 / 60% = $180,000 To calculate units sold: Total Sales / Price $ 180,000 / $20 = 9,000 units ACG 2071 - Fall 2010

  2. 2. Sales Revenue for March Expected Units x Sales Price 10,000 units x $ 20 = $ 200,000 ACG 2071 - Fall 2010

  3. 3. Total Sales – 1st Quarter (Jan, Feb, March) January Sales ($76,000 + 114,000) $ 190,000 February Sales ($ 78,400 / 40%) $ 196,000 (note: $78,400 = 40% x Feb. sales) March Sales (from prior question) $ 200,000 TOTAL SALES $ 586,000 ACG 2071 - Fall 2010

  4. 4. Accts Receivable – March 31 Note: 40% of sales collected in month of sale, 60% collected in following month March Sales = $ 200,000 Still not collected at end of month 200,000 x 60% = $ 120,000 ACG 2071 - Fall 2010

  5. 5. Units in FG inventory – Dec. 31 Note: Inventory = 20% of next month’s expected sales (units) January Sales = $ 190,000 January Sales (units) = 190,000 / 20 = 9,500 Ending December inventory (units) 9,500 x 20% = 1,900 ACG 2071 - Fall 2010

  6. 6. Units to be manufactured in January January Sales (units) 9,500 + Ending Inventory (20% of Feb) 1,960 * Total Production Needs 11,460 - Beginning Inventory (20% of Jan) 1,900 Units to be Manufactured 9,560 * February unit sales = 196,000 / 20 = 9,800 ACG 2071 - Fall 2010

  7. 7. Cash Financing Required - January Note: minimum cash balance of $15,000 Beginning Cash Balance $ 22,500 Add: Cash Receipts – Jan. 184,000 (108,000 + 76,000) Less: Cash payments – Jan. (195,000) Ending Cash Balance $ 11,500 Financing Required = $ 3,500 ACG 2071 - Fall 2010

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