Complete the following questions using Microsoft Word or Excel, as appropriate. Review the grading rubric to confirm you are meeting the assignment requirements.
Cryon Corporation manufactures and sells a seasonal product that has a peak in sales in the third quarter. The following information reflects projections for Year 2 – the coming year – and the first two quarters of Year 3.
- Units sell at $10 each. Budgeted sales for the next 6 quarters are outlined below.
Year 2 Quarter Year 3 Quarter 1 2 3 4 1 2 Budgeted unit sales 40000 65000 110000 70000 65000 55000
- Sales are collected in the following pattern: 75% are collected in the quarter the sales are made, and the remaining 25% are collected in the following quarter. On January 1, Year 2, the company had accounts receivable of $70,000, all of which will be collected in the first quarter of Year 2. Bad debts are negligible and can be ignored.
- The company desires finished goods inventory at the end of each quarter equal to 30% of the budgeted unit sales for the next quarter. On December 31, Year 1, the company had 15,000 completed units on hand.
- Five pounds of raw materials inventory is required to complete one unit of product. The company requires ending raw materials inventory at the end of each quarter equal to 10% of the following quarter’s production needs. On December 31, Year 1, the company had 38,000 pounds of raw material on hand.
- Raw material cost is $0.80 per pound.
Prepare the following budgets and schedules for Year 2, showing quarterly figures:
- Sales budget
- Schedule of expected cash collections
- Production budget
Direct materials budget that summarizes both pounds and dollars.