Problem 1 - Use the following information to answer questions below:
Hendricks Company produces one product that sells at $20 per unit and sells best on Mother's day. As a result peak sales occur in May of each year. Additional information about budgeted sales for the second quarter is:
Budgeted Sales units:
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April
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20,000 units
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|
May
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30,000 units
|
|
June
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15,000 units
|
|
Total
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65,000 units
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Past experience shows that the company collects 25% of a month's sales in the month of sale. Another 65% is collected in the month following sale, and the remaining 10% is collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $330,000, and March sales totaled $360,000.
Required:
Calculate budgeted sales in dollars and prepare a schedule of cash collections from sales, by month and in total, for the second quarter.
If the company prepares a budgeted balance sheet as of June 30, compute the accounts receivable as of that date.
Hint: You must first calculate the budgeted sales in dollars. You may wish to create the collection schedule using the format of the in-class problem.
Problem 2 - Sessions Incorporated has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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Year
|
|
Units to be Produced
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9,000
|
7,500
|
8,000
|
8,500
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33,000
|
Each unit requires 0.55 direct labour hours (DLH). Direct labour-hour workers are paid $12 per hour.
Required:
Construct the company's direct labour budget for the upcoming fiscal year, assuming that the direct labour workforce is not adjusted each quarter.
Assume that the company's direct labour workforce consists of permanent employees who are guaranteed to be paid for at least 2,800 hours of work each quarter.
If the number of required DLH is less than this number, the workers are paid for 2,800 hours anyway. Any hours worked in excess of 2,800 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labour.
Suggestion: It may be simpler to work with a format that allows you to show: Units to be produced; DLH needed; Regular Hours; Overtime Hours; Cost of regular hours; Cost of overtime hours. With these complete it is fairly simple to calculate the total Direct Labour cost.