Production and cash-outlay computations
RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.
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1-May
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31-May
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Product K (Units)
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55,000
|
60,000
|
|
Rate Materials A (Units)
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40,000
|
37,000
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Each unit of raw material A costs $8; RPR pays for all purchases in the month of acquisition. Invoices that account for 80% of the cost of materials acquired will be paid within 10 days of receipt, entitling the company to a 2% cash discount.
a. Determine the number of units of product K to be manufactured in May.
b. Compute the May cash outlay for purchases of raw material A.
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July
|
August
|
September
|
|
Beginning cash balance
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$10,000
|
$ ?
|
$ ?
|
|
Add: Cash receipts
|
50,000
|
63,000
|
71,000
|
|
Deduct: Cash payments
|
-64,000
|
-58,000
|
-64,000
|
|
Cash excess (deficiency) before financing
|
($4,000)
|
$ ?
|
$ ?
|
|
Financing
|
|
|
|
|
Borrowing to maintain minimum balance
|
?
|
?
|
?
|
|
Principal repayment
|
?
|
?
|
?
|
|
Interest payment
|
?
|
?
|
?
|
|
Ending cash balance
|
$ ?
|
$ ?
|
$ ?
|