The O'Brien Vineyards makes and sells an awarding Pinot Noir. Each Bottle of Pinot Noir sells for $24 and has a unit variable cost of $14.
Put together a Cash Budget.
- Maintains a 12% (1% per month) open line of credit for $75,000.00
- Maintains a minimum cash balance of $20,000.00
- Borrows on the first day of the month and repays loans last day of the next month (for example, if you were to borrow for July, which is really to meet August 1 beginning balance, you would repay end of September. You have use of the funds for 2 full months).
- Pays a cash dividend of $10,000.00 in July.
- Purchased $38,000.00 of oak barrels in August and $48,400.00 of oak barrels in September both purchases of equipment paid for in cash.
- Cash balance at July 1st is $22,500.00
Summarized budget information:
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July
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August
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September
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Beginning Cash
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$22,500.00
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Cash Collections
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$70,000.00
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$88,000.00
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$129,650.00
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Total Cash Available
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$92,500.00
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Cash Disbursements
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Materials
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$18,000.00
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$19,500.00
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$17,700.00
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Direct Labor
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$8,000.00
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$9,200.00
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$8,500.00
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MOH
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$24,000.00
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$27,000.00
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$25,000.00
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Selling and Admin
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$18,000.00
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$19,300.00
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$18,850.00
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Equipment Purchase
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$0.00
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$38,000.00
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$48,400.00
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Dividend
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$10,000.00
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Total Disbursements
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Excess (Deficiency)
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Financing
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Borrowing
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Repayments
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Interest
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Total Financing
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Ending Cash Balance
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