Rovniak Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $890,000 in October, $950,000 in November, $1,025,000 in December and $920,000 in January. Rovniak's sales are 25% cash and 75% credit. Rovinak's collection history indicates that credit sales are collected as follows:

25% in the month of the sale

65% in the month after the sale

8% two months after the sale

2% are never collected

1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.

2. Prepare a cash collections budget for December and January. Round all answers up to the nearest dollar.

1. Direct Materials Variance

Refer to E10-48B on page 599 of your text. Refer to the direct materials variance compuations there, which are incomplete. Fill in the missing values and identify the flexible budget variance as favorable or unfavorable.

2. Describe at least 4 reasons a company would use a performance evaluation system.