22. Hot Mama's has prepared its fourth quarter budget and provided the following data:Nov$48,500DecOct$52,000$51,200Cash collectionsCash payments:Purchases of direct materialsOperating expensesCapital expenditures35,00013,25015,65022,4509,65023,90016,25012,500The cash balance on September 30 is projected to be $5000. The company has to maintain aminimum cash balance of $6,500 and is authorized to borrow at the end of each month to make upshortfalls. Itmayborrow in inerements of $6,000 and has to pay interest every month at ananyannual rate of 5%. All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $6,000 whenever there is surplus cash.Calculate the ending projected cash balance before financing for November.A) S(2,900)B) $3,100C) $6.500D) S53.600

Cash collections for October: $52,000 Purchases of direct materials: $35,000 Operating expenses:…

22. Hot Mama's has prepared its fourth quarter budget and provided the following data: Oct Nov Dec $52,000 $48,500 $51,200 Cash collections Cash payments: Purchases of direct materials Operating expenses Capital expenditures 35,000 13,250 15,650 22,450 9,650 23,900 16,250 12,500

22. Hot Mama's has prepared its fourth quarter budget and provided the following data: Oct Nov Dec $52,000 $48,500 $51,200 Cash collections Cash payments: Purchases of direct materials Operating expenses Capital expenditures 35,000 13,250 15,650 22,450 9,650 23,900 16,250 12,500

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and the remainder are credit sales. The company finds that typically 10 percent of a months credit sales are paid in the month of sale, 70 percent are paid the next month, and 15 percent are paid in the second month after sale. Expected cash receipts in July are budgeted at what amount? a. 114,520 b. 143,150 c. 145,720 d. 156,000
Carmichael Corporation is in the process of preparing next years budget. The pro forma income statement for the current year is as follows: Required: 1. What is the break-even sales revenue (rounded to the nearest dollar) for Carmichael Corporation for the current year? 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a 60,000 increase in fixed expenses. What is the break-even point in dollars for next year? (CMA adapted)
Before the year began, the following static budget was developed for the estimated sales of 50,000. Sales are higher than expected and management needs to revise its budget. Prepare a flexible budget for 100,000 and 110,000 units of sales.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
Before the year began, the following static budget was developed for the estimated sales of 100,000. Sales are sluggish and management needs to revise its budget. Use this information to prepare a flexible budget for 80,000 and 90,000 units of sales.
Cash budget Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. If purchases are budgeted to be 40,000 for August and 36,000 for September, what are the budgeted cash payments for purchases on account for September?
Tomo, Inc. has prepared its third quarter budget and provided the following data: Jul $49,000 Aug $39,800 Sep $47,900 Cash collections Cash payments: Purchases of direct materials Operating expenses Capital expenditures 17,900 11,100 0 The cash balance on June 30 is projected to be $4,600. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions. 31,000 12,100 13,700 O A. $46600 OB. $-8842 OC. $15000 O D. $6158 21,800 8,700 24,900
Delbert, Inc. has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $49,000 $39,500 $46,000 Cash payments: Purchases of direct materials 30,000 22,100 17,600 Operating expenses 12.400 8,500 11,400 Capital expenditures 13,300 24,200 0 The cash balance on June 30 is projected to be $5,300. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. How much will the company have to borrow at the end of July? OA. $15,000 OB. $10,000 OC. $5,000 OD. $0
Tomo, Inc. has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $52,000 $39,600 $47,200 Cash payments: Purchases of direct materials 31,000 21,200 17,800 Operating expenses 12,500 8900 11,400 Capital expenditures 13,100 24,900 0 The cash balance on June 30 is projected to be $4300. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions.
Garden Depot is a retailer that provided the following budgeted cash flows for next year: 1st Quarter 2nd Quarter 3rd Quarter 4th QuarterTotal cash receipts $ 290,000 $ 410,000 $ 340,000 $ 360,000Total cash disbursements $ 351,000 $ 321,000 $ 311,000 $ 331,000The company’s beginning cash balance for next year will be $47,000. The company requires a minimum cash balance of $10,000 and may borrow money at the beginning of any quarter and may repay any part of its loans at the end of any quarter. Interest payments, based on a quarterly interest rate of 3%, are due on any principal at the time it is repaid. For simplicity, assume interest is not compounded. Required:Prepare the company’s cash budget for next year.
Carol's Chocolate Company has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $49,000 $39,700 $47,000 Cash payments: Purchases of direct materials 31,000 21,400 17,000 Operating expenses 12,200 8,700 11,700 Capital expenditures 13,100 24,400 0 The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August.
4. Prepare a Cash Budget from the data given below for a period of six months (July to December) (1) Month Sales (OMR) Raw Materials(OMR) May 75,000 37,500 June 75,000 37,500 July 1,50,000 52,500 August 2,25,000 3,67,500 September 3,00,000 1,27,500 October 1,50,000 97,500 November 1,50,000 67,500 December 1,37,500 ____ (2) Collection estimates: ➢ Within the month of sale: 5% ➢ During the month following the sale: 80% ➢ During the second month following the sale: 15% (3) Payment for raw materials is made in the next month. (4) Salary OMR 11,250, Lease payment OMR 3750, Misc. Exp. OMR 1150, are paid each month (5) Income tax OMR 26,250 each in September and December. (6) Payment for research in October OMR 75,000 (7) Opening Balance on 1st July OMR 55,000