- Karmee Company Has Been Accumulating Operating Data In Order To Prepare An Annual Profit Plan Details Regarding Karmee 1 (45.46 KiB) Viewed 64 times
Karmee Company has been accumulating operating data in order to prepare an annual profit plan. Details regarding Karmee's sales for the first 6 months of the coming year are as follows: The variable operating expenses (other than cost of goods sold) for Karmee are 15% of sales and are paid for in the month following the sale. The annual fixed operating Estimated Monthly Sales January $685,000 Type of Monthly Sale Cash sales 15% February 723,000 Credit sales 85% March 815,000 Collection Pattern for Credit Sales April 665,000 expenses are presented below. All of these are incurred uniformly throughout the year and paid monthly except for insurance and property taxes. Insurance is paid quarterly in January, April, July, and October. Property taxes are paid twice a year in April and October. Month of sale 25% May 717,000 45% June 825,000 Annual Fixed Operating Costs One month following sale Second month following sale 30% Karmee's cost of goods sold averages 45% of the sales value. Karmee's objective is to maintain a target inventory equal to 35% of the next month's sales in units. Purchases of merchandise for resale are paid for in the month following the sale. $ 648,000 Advertising 480,000 Depreciation Insurance 160,000 320,000 Property taxes Salaries 1,074,000 The amount of cash collected in March for Karmee Company from the sales made during March will be Note: Cash sales are collected in the month of sale