Inman Products estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

Answer 1

First, let's calculate the desired ending inventory:

Desired ending inventory = 25% x (180,000 + 198,000 + 216,000 + 234,000) = 154,500 units

Next, let's calculate the total units Inman Products needs to produce:

Total units needed = 180,000 + 198,000 + 216,000 + 234,000 - 154,500 = 674,500 units

Now, let's calculate the total sales revenue:

Total sales revenue = Total units x Price per unit = 674,500 x $25 = $16,862,500

40% of sales are for cash, so cash sales revenue = 40% x $16,862,500 = $6,745,000

The remaining 60% of sales are credit sales, so credit sales revenue = 60% x $16,862,500 = $10,117,500

70% of credit customers pay within the quarter, so cash collections from credit sales = 70% x $10,117,500 = $7,082,250

The remainder of credit sales is received in the following quarter, which means the accounts receivable for these sales will be:

Accounts receivable = 30% x $10,117,500 = $3,035,250

Therefore, the total cash inflow for the quarter is:

Cash inflow = Cash sales revenue + Cash collections from credit sales = $6,745,000 + $7,082,250 = $13,827,250

Note: We did not include any information about costs or expenses, so this analysis only provides an estimate of sales revenue and cash inflow.

Answer 2

Inman Products estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

Production in units for the third quarter should be budgeted at
Question 45 options:

Answer 3

To calculate the production in units for the third quarter, we need to know the total units needed for the first three quarters and subtract the units produced in the first two quarters.

Total units needed for the first three quarters:
180,000 + 198,000 + 216,000 = 594,000 units

Units produced in the first two quarters:
180,000 + 198,000 = 378,000 units

Units needed in the third quarter:
594,000 - 378,000 = 216,000 units

Therefore, the production in units for the third quarter should be budgeted at 216,000 units.