Assignment
This is a comprehensive problem all contained on this spreadsheet tab.
Cash Budget
Below is summary monthly income statement data for Ace Manufacturing Company.
|
January |
February |
| Sales revenue |
250,000 |
275,000 |
| Direct materials purchases |
60,000 |
70,000 |
| Direct labor |
88,000 |
95,000 |
| Manufacturing overhead |
50,000 |
52,000 |
| Selling and administrative expenses |
45,000 |
46,000 |
All sales are on account, and history has shown that 40% of sales is expected to be collected in the month of the sale, with 60% collected the following month.
Direct materials are paid 50% in the month of purchase and 50% the following month. All other expenses are paid as incurred. All costs shown are cash-based costs (depreciation has already been eliminated).
Other data:
1. December sales were $230,000.
2. Purchases of direct materials purchased in December were $50,000.
3. The company has interest payments due of $5,000 per month.
4. The cash balance on January 1 was $15,000.
Instructions
A. Prepare schedules for expected collections from customers and expected payments for direct materials purchases.
B. Prepare a cash budget for January and February.