Your company manufactures specialty items. In order to reduce any loss from a customer canceling an order after production has been started, your company requests a 50% deposit before it will start the manufacturing process. On January 3, you get an order for a product that costs $2,000 to make. On January 15 you get a $1500 deposit and start production of the product. You have spent $1,750 on the manufacture of the product as of January 31 and another $250 in February before you deliver the finished product on February 12. You receive $500 on February 15 and the final $1,000 on March 12. What are the revenues and expenses associated with this product for January, February, and March?
To determine the revenues and expenses associated with this product for January, February, and March, we need to analyze the deposits received, the costs incurred during each month, and the final payments received.
January:
- Deposit received on January 15: $1500 (revenue)
- Costs incurred on the manufacture of the product in January: $1750 (expense)
February:
- Costs incurred on the manufacture of the product in February: $250 (expense)
March:
- Final payment received on March 12: $1000 (revenue)
To summarize:
- January revenue: $1500
- January expense: $1750
- February expense: $250
- March revenue: $1000
Note: Since the manufacturing process started in January, the $1500 deposit received in January is considered revenue for that month. The final payment received in March is also considered revenue for that month.
Please note that this analysis assumes there are no other revenues or expenses associated with this specific product during the given time period.