第二題(23%)
Sunbeam company purchases chairs from Sunnys, Inc., throughout the year. However, in anticipation of
late summer and carly fall purchases, Sunbeam ramp up inventories from May through August. Sunbeam is
billed when chairs are ordered. Invoices are payable within 60 days. From past experience, Sunnys'
accountant projects 20% of invoices will be paid in the month invoiced, 50% will be paid in the following
month, and 30% of invoices will be paid two months after the month of invoice. The average selling price for
per chair is $450.
To meet demand, Sunnys increases production from April through July, because the chairs are produced
a month prior to their projected sale. Direct materials are purchased in the month of production and are paid
for during the following month (terms are payment in full within 30 days of the invoice date). During this
period there is no production for inventory, and no materials are purchased for inventory. Direct manufacturing labor and manufacturing overhead are paid monthly. Variable manufacturing
overhead is incurred at the rate of $7 per direct manufacturing labor-hour. Variable marketing costs are driven
by the number of sales visits. However, there are no sales visits during the months studied. Sunnys, Inc., also
incurs fixed manufacturing overhead costs of $5,500 per month and fixed nonmanufacturing overhead costs
of $2,500 per month.
Direct Materials and Direct Manufacturing Labor Utilization and Cost are listed in the following table:
The beginning cash balance for July 1, 2020, is $10,000. On October 1, 2019, Sunnys had a cash crunch and
yard 6s
borrowed $30,000 on a 6% one-ycar note with interest payable monthly. The note is due October 1, 2020.
Using the information provided, you will need to determine whether Sunnys will be in a position to pay off
this short-term debt on October 1, 2020.
Required:
申論題內容
2. Suppose Sunnys is interested in maintaining a minimum cash balance of $10,000. Will the company be able
to maintain such a balance during all three months analyzed? Following the above demand and cash budget,
what suggestion do you propose for Sunnys having a suitable cash management strategy. (5%)
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