Question:
Placibo Ltd has estimated the sales units and selling prices for its products for each of the next four months. This information is shown in table.
|
June
|
July
|
August
|
September
|
|
Forecast sales units
|
20,000
|
20,000
|
22,000
|
25,000
|
|
Selling price per unit
|
$4.25
|
$4.50
|
$4.50
|
$4.75
|
Placibo's average cost of sales is 30% of revenue. It incurs overhead costs of $55,000 per month, of which $25,000 per month is depreciation. Placibo receives payment from its customers in the month following the month of sale, and it pays its suppliers in the month following the recognition of the cost of sales in the Income Statement. Overheads are paid in the same month in which they are incurred.
a. Prepare a budgeted Income Statement for each of the three months July-September.
b. Prepare a cash forecast for each of the three months July-September.