Acc problems – aztec company & black diamond company

Aztec Company sells its product for $170 per unit. Its actual and projected sales follow.        
   Units Dollars      
  April (actual) 9,000       $1,530,000         
  May (actual) 3,200       544,000         
  June (budgeted) 6,000       1,020,000         
  July (budgeted) 7,000       1,190,000         
  August (budgeted) 4,400       748,000         
All sales are on credit. Recent experience shows that 28% of credit sales is collected in the month of the sale, 42% in the month after the sale, 28% in the second month after the sale, and 2% proves to be uncollectible. The product’s purchase price is $110 per unit. All purchases are payable within 14 days. Thus, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has a policy to maintain an ending monthly inventory of 20% of the next month’s unit sales plus a safety stock of 115 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,536,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month-end is $100,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $100,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 11% interest rate. On May 31, the loan balance is $48,500, and the company’s cash balance is $100,000. (Round amounts to the nearest dollar.)  
1. Prepare a table that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July.          
 Percent Collected in       
 April May June July August   
Credit sales from:        
 Amount Collected in       
 April May June July August   
Credit sales from:        

2. Prepare a table that shows the computation of budgeted ending inventories (in units) for April, May, June, and July.”        
Budgeted Ending Inventory        
For April, May, June and July        
 April May June July August   
Next month’s budgeted sales        
Ratio of inventory to future sales        
Budgeted “base” ending inventory        
Safety stock        
Budgeted Ending Inventory        
3. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.         
Merchandise Purchases Budgets        
For May, June and July        
 April May June July August   
Budgeted Ending Inventory (units)        
Budgeted unit sales for month        
Required units of available merchandise        
Budgeted beginning inventory (units)        
Budgeted purchases (units)        
Budgeted cost per unit        
Budgeted cost of merchandise purchases        
“4. Prepare a table showing the computation of cash payments on product purchases for June and July.
Cash payments on product purchases (for June and July)        
 Percent Paid in       
 May June July August    
From purchases in:        
  Amount Paid in      
 Total May June July August   
From purchases in:        
“5. Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month. (Do not round intermediate calculations.)
Cash Budget        
June and July        
 June July      
Beginning cash balance        
cash receipts from customers        
Total cash available        
Cash disbursements:        
Payments on purchases        
Selling and administrative expenses        
Interest expense        
other option could be here *** see right   <================  other options   
Total cash disbursements    1 additional loan (repayment)   
Preliminary cash balance    2 cash receipts from customers   
Additional loan (repayment)    3 interest expense   
Ending cash balance    4 payments on purchases   
    5 selling and administrative expenses   
Loan balance        
 June July      
Loan balance – Beginning of month        
Additional loan repayment        
Loan balance – End of month 


Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company’s management predicts that 5,400 skis and 6,400 pounds of carbon fiber will be in inventory on June 30 of the current year and that 154,000 skis will be sold during the next (third) quarter. A set of two skis sells for $340. Management wants to end the third quarter with 3,900 skis and 4,400 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $19 per pound. Each ski requires 0.5 hours of direct labor at $24 per hour. Variable overhead is applied at the rate of $12 per direct labor hour. The company budgets fixed overhead of $1,786,000 for the quarter.”        
“1. Prepare the third-quarter production budget for skis.
Prepare the third-quarter production budget for skis.””
2. Prepare the third-quarter direct materials (carbon fiber) budget; include the dollar cost of purchases.
Prepare the third-quarter production budget for skis.”    

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