month of sale. The company requires a minimum cash balance of $1,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yeaman need to borrow cash by the end of February?

month of sale. The company requires a minimum cash balance of $1,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yeaman need to borrow cash by the end of February?

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 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Yeaman has $13,000 in cash on hand on January 1 and has collected the following budget data:
(Click on the icon to view the budget data)
Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yeaman has cash payments for selling and administrative expenses including salaries
of $65,000 per month plus commissions that are 1% of sales, all paid in the month of sale. The company requires a minimum cash balance of $1,000. Prepare a cash budget for January and February.
Round to the nearest dollar. Will Yeaman need to borrow cash by the end of February?
Begin by preparing the cash budget for January, then prepare the cash budget for February (Complete all input fields. Enter a "0" for any zero balances. Round all amounts entered into the cash
budget to the nearest whole dollar.)
Data table
Sales
Cash receipts from customers
Cash payments for direct materials purchases
Direct labor costs
Manufacturing overhead costs (includes depreciation of
$1,100 per month)
Print
CO
Done
January February
$ 529,000 $ 566,000
442,300 502,000
180,462
160,366
135,010
55,492
112,532
53,782
- X

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