Explore BrainMass
Share

# Total dollar sales, cash receipts, net relevant cost and more

Can you help me get started with this assignment?

1. Juro Supply forecasts purchases of 12,200 units in June. It sells each unit for \$10.50. The firm has 1,000 units on hand on June 1. The desired ending inventory on June 30th is to be 20% higher than beginning inventory. Total dollar sales for June are expected to be:
a. \$119,700
b. \$126,000
c. \$128,100
d. \$130,200

2. Allen Co.'s sales are 10% cash and 90% on credit. Credit sales are collected as follows: 30% in month of sale, 50% the next month, 20% in the following month. On 12/31, the accounts receivable balance is \$54,000, of which \$12,000 is from November sales. Total sales for January are budgeted to be \$100,000. Cash receipts budgeted for January total:
a. \$70,000
b. \$70,400
c. \$74,000
d. \$79,000

3. A boat costs \$108,000 and, uninsured, was wrecked the first day it was used. It either can be disposed for \$11,000 cash and replaced with a similar boat costing \$110,000, or rebuilt for \$98,000 and be brand new as far as operating characteristics and looks are concerned. The net relevant cost of replacing the boat is:
a. \$ 87,000
b. \$ 97,000
c. \$ 99,000
d. \$110,000

4. The relevant cost of rebuilding the boat described in the above question is:
a. \$ 97,000
b. \$ 98,000
c. \$ 99,000
d. \$110,000

5. Omaha Plating Corporation is considering purchasing a machine for \$1,500,000. The machine will generate a net after-tax income of \$100,000 per year for 15 years. The firm will use straight-line depreciation for the new machine over 10 years with no residual value. What is the payback period for the new machine?
a. 4 years
b. 5 years
c. 6 years
d. 10 years
e. 15 years

6. Carmino Company is considering an investment in an asset that generates net after-tax income of \$6,000 at the end of each year of its four-year life. The asset has no salvage value. The firm is in the 40% tax bracket. The book values of the investment at the beginning of each year are:
Year 1-\$30,000; Year 2 -\$15,000; Year 3 -\$7,500; Year 4 -\$3,750
The asset's book rate of return on average investment is:
a. 12%
b. 27%
c. 36%
d. 43%

USE THE ABOVE QUESTION TO ANSWER THE FOLLOWING ONE.
7. The amount of after-tax net cash inflow from the asset in Year 3 is:
a. \$ 6,000
b. \$ 7,500
c. \$ 8,100
d. \$13,500

#### Solution Preview

1. Juro Supply forecasts purchases of 12,200 units in June. It sells each unit for \$10.50. The firm has 1,000 units on hand on June 1. The desired ending inventory on June 30th is to be 20% higher than beginning inventory. Total dollar sales for June are expected to be:
b. \$126,000
Beginning stock = 1000
Purchases in the month = 12200
Ending inventory = 1000*(1+20%)=1200
Units sold = 1000+12200-1200 = 12000
Price per unit = 10.50
Expected Sales for June = \$126,000

2. Allen Co.'s sales are 10% cash and 90% on credit. Credit sales are collected as follows: 30% in month of sale, 50% the next month, 20% in the following month. On 12/31, the accounts receivable balance is \$54,000, of which \$12,000 is from November sales. Total sales for January are budgeted to be \$100,000. Cash receipts budgeted for January total:
d. \$79,000
Cash receipts ...

#### Solution Summary

You will find the answers to this puzzling assignment inside, along with detailed explanations.

\$2.19