University:
Baltimore City Community College
Course:
ACT 221 | Principles of Financial Accounting I
Academic year:

2024
Views:

395

Pages:

2
Author:

Danny A.

Sales Budget Lewis Corporation's forecasted sales for the first three months of 1992 are: The sales budget is prepared by multiplying the forecasted monthly unit sales volume by the unit sales price. Lewis Corporation's unit sales price for its product is $20. The company's sales budget is illustrated in Exhibit. Cash Collections The schedule of cash collections provides information on cash flows from operations. Lewis Corporation's sales are all made on account, and past history indicates that 70 percent of these sales are collected during the month of sale and the remaining 30 percent are collected during the following month. Lewis Corporation's schedule of cash collections is illustrated in Exhibit. Production Production requirements are determined following the completion of the sales budget. The production budget must consider (1) the expected number of unit sales and (2) the desired level of the ending finished goods inventory. The desired level of the ending finished goods inventory is determined by balancing the cost of storage, insurance, and taxes against the possibility of lost customers when products are not available for sale. The monthly budgeted units of production are computed as follows: Lewis Corporation wishes to maintain its ending finished goods inventory at 50 percent of the next month's unit sales. Consequently, the company's January 1992 production budget is calculated: Lewis Corporation's production budget for the first quarter of 1992 is illustrated in Exhibit.