prepare the cash collection and required production (in units) for January, February, and March.

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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ZoLee Food Company is preparing budgets for the quarter ending Mar 31, 2020.
Jan 10,000 units
Feb 50,000 units
Mar 30,000 units
Apr 60,000 units
May 40,000 units
The management of this company assumes the following:
1) Selling price is $5.
2) On Dec 31, 2019, the finished goods totaled 3,000 units. Finished goods at the end of each month must be
20% of the following month’s budgeted sales.
3) All sales are on account. 70% of the credit sales are collected in the month of sale, 25% in the month
following sale, and the remainders are uncollectible.
4) On Dec 31, 2019, the cash balance is $10,000

Due to the COVID-19 outbreak, the company predicts only 50% of the budgeted sales in units can be
achieved. Moreover, the company decides to cut the selling price to $3, and the company expects 50% of
credit sales can be collected in the month of sale, 20% in the month following sale, the reminders are not
collectible. The other things being the same. Please prepare the cash collection and required production (in
units) for January, February, and March.

 

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