Posted: April 26th, 2016

# Compute the estimated cash collections on accounts receivable for the month of February?

1. Falstags Brewery has estimated \$63,375, \$68,625, and \$73,875 budgeted costs for the manufacture of 3,500, 4,500, and 5,500 gallons of beer, respectively, next quarter.

What are the variable and fixed manufacturing costs in the flexible budget for Falstags Brewery?

2. Sales on account for the first two months of the current year are budgeted as follows:

Jan. \$700,000
Feb. \$750,000

All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows:

Collections within the month of sale:
Within discount period 60%
After discount period 15%
Collections within the month following sale:
Within discount period 15%
After discount period 7%
Returns, allowances, and uncollectibles: 3%
Total 100 %

Compute the estimated cash collections on accounts receivable for the month of February.

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