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Task1. Hallas Company produces fast-bonding glue in its Northwest plant. The company normally produces and sells 40,000 gallons of glue each month. This glue, which is recognized as MJ-7, is used in wood industry to manufacture plywood. The selling price of MJ-7 is $35 per gallon, variable costs are $21 per gallon, fixed manufacturing overhead costs in plant total $230,000 per month, and fixed selling costs total $310,000 per month.

Task2. Clearwater Glass Company examined its cash management policy and found that it acquires an average of 5 days for checks which the company prepares to reach its bank and thus to be deducted from its checking account balance. On other hand, an average of four days elapses from the time Clearwater Glass obtains payments from its customers till the funds are available for use at its bank.

On the average day clear water glass prepares verifies that total 70,000 and it receives verifies from customers that total 80,000.

(a) Evaluate the disbursement float, collection float, and net floats in term dollars.

(b) When clear water glass has an opportunity cost equivalent to 10%, how much would it be willing to spend each year to lessen collections delay "float" by two days?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M94155

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