1- Production and Purchases Budget
The Good as Old Company manufactures antique-looking oak rocking chairs. Budgeted sales for the first five months of the year are as follows:
Budgeted Sales (Units)
Each rocking chair requires 10 square feet of oak, at a cost of $20 per square foot.
The company wants to maintain an inventory of chairs equal to 25% of the following month’s sales. At the beginning of the year, 40 chairs are on hand.
Assume the company maintains an inventory of oak equal to 10% of the next month’s needs. At the beginning of the year, 240 square feet of oak are on hand. Inventory of oak at March 31 is estimated to be 180 square feet.
Required: (use the spreadsheet below for both)
Prepare a production budget, in units, for each of the first four months.
Prepare a purchases budget, in dollars, for each of the first three months. Use the attached spreadsheet to prepare the budgets or use the editor to type your budgets.
The following budget estimates have been prepared by Clifton Company:
Cash Receipts – May $120,000——–Cash Receipts – June $110,300
Cash Payments – May $150,000——Cash Payments – June $150,000
The company likes to maintain a minimum cash balance of $40,000. Any excess cash is invested in a money market account earning 9% compounded monthly. Interest is reinvested in the money market account. Any cash deficiencies are covered by a withdrawal from the money market account. If additional cash is needed, the company has a line of credit at 12% interest with the local bank. Interest is paid monthly.
Assume a cash balance on May 1 of $40,000, a money market account balance of $0, and a credit line balance of $0.
Prepare a cash budget for May and June. Use the attached spreadsheet or use the editor.
3- Cash Receipts from Credit Sales
Walmart’s budgeted sales are as follows:
The company expects to collect 75% of a month’s sales in the month of sale and 25% in the following month.
Question – What are the cash collections for February? Show your work. You may answer below or use the attached spreadsheet.