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Inventory and accounts receivable planning

Douglas Company plans to sell 24,000 units of Product A during July and 30,000 units during August. Sales of Product A during June were 25,000 units. Past experience has shown that end-of -month inventory should equal 3,000 units plus 30% of the next month's sales. On June 3o this requirement was met. Based on these data, how many units of Product A must be produced during the month of July?

A) 28,800
B) 22,200
C) 24,000
D) 25,800

Razz Company is estimating the following sales:

July.............$45,000
August.........$50,000
Sept............$65,000
Oct.............$80,000
Nov.............$75,000
Dec............$60,000

Sales at Razz are normally collected as follows: 10% in the month of sale;60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

a) $49,500
b) $76,500
c) $120,500
d) $135,500

Solution Preview

For Douglas at the end of June, the inventory is calculated as 3,000 units + (24,000 x 30%) = 10,200 units

For Douglas at the end of July, the ...

Solution Summary

The solution projects inventory needs and accounts receivable.

$2.19