Question

D'Unique Enterprise, a company that manufactures hair growth oil is preparing for its upcoming financial year (2021). D’Unique' is seeking a loan from JNT Bank to purchase equipment that will be used to package the oils in anticipation of sales. The loans officer at the bank requesting the company's upcoming financial year's budget to assess their cash position to repay the loan The following information was used torrepare the master budget for D’Unique Enterprise: A. Sales/Collection Sales unit in the fourth quarter of 2020 will be 2500 units and is expected to increase by 500 units over each quarter in 2021. Selling price is $60 per unit. All sales are on account. Management expects future sales collection to follow past experiences. Customers pay 60% in the quarter of sales and 40% in the quarter following sales. Accounts receivable for December 31, 2020 is expected to be $60,000. B. Production To reduce the risk of a stock-out or idle time, D'Unique Co. has maintained an ending inventory policy of 20\% of the following quarter's sales unit. C. Direct material Each bottle of hair growth oil requires four ounces of liquid which cost $3.50 per ounce. The company wants to maintain an ending inventory of raw materials equal to 10\% of the next quarter's production requirements. Ending inventory of raw material for the fourth quarter of 2020 will be 1,520 ounces. Payments to suppliers for the purchase of direct material are done in two tranches - 70% in the quarter of purchase and 30% the quarter following purchase. Accounts payable of $10,600 at December 31, 2020, is expected to be paid in full in the first quarter of 2021. D. Direct Labour The standard wages rate of direct labour is $10.00 per hour.

Answer 1

Answer pigs in blankets