Q1) Create a cash budget for Rotor Products, Inc. for second quarter of 2006, based on following information. Marketing department has provided you with following sales estimates, all of which are for cash:
| |
Total sales |
| March 2006 (actual) |
$425,000 |
| April 2006 |
$330,000 |
| May 2006 |
$420,000 |
| June 2006 |
$450,000 |
Company estimates its purchases at 60 percent of next month's sales, and payments for those purchases are budgeted to lag purchases by 1 month.
Various disbursements have been estimated as follows:
| |
April |
May |
June |
| Wages\\salaries |
$220,000 |
$190,000 |
$190,000 |
| Rent |
$14,000 |
$14,000 |
$14,000 |
| Other Expenses |
$5,000 |
$6,000 |
$7,000 |
Additionally, a tax payment o $55,000 is due on April 15. Company's projected cash balance at beginning of April is $60,000, and company desires to maintain balance of $50,000 at the end of each month.