Question

a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all paid in cash) amount to $60,000 per month. The accounts payable balance on March 31 totals $96,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Edwards Company. b. Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled $255,000 $(45,000 from February's sales and the remainder from March.) Prepare a schedule for each month showing budgeted cash receipts for Edwards Company.

Answer 1

Budgeted cash disbursements for Edwards Company include paying for production costs, monthly fixed selling, and administrative expenses, and settling accounts payable. Cash receipts are recognized based on the collection percentages from sales in different months post-sale and include the collection of outstanding receivables.

Step-by-step explanation:

The student is asking for the preparation of a schedule showing budgeted cash disbursements and receipts for Edwards Company, considering various timings of costs, expenses, and sales collections. This involves understanding cash flow projections within managerial accounting, a core aspect of business operations and financial planning.

Cash disbursements would include cash paid for production costs, in the timeframe established (40% in the incurred month and the remaining 60% in the following month), and the selling and administrative expenses. It also includes payment of the existing accounts payable.

For the cash receipts, they are to be recognized based on collections from sales according to the given percentages (60% in the month of sale, 30% in the following month, and 10% in the second month following the sale) and considering the outstanding accounts receivable.

Answer 2

150,000

Step-by-step explanation: