Cash budget

 

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          275,000       250,000        
Direct materials purchases            60,000         70,000        
Direct labor            88,000         95,000        
Manufacturing overhead            60,000         62,000        
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 $240,000.          
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.        
             
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