Question
In: Accounting
Cash Budget: Estimated sales January February March April May Total Coffee sales (units) 15,000 16,000 17,500...
Cash Budget:
|
Estimated sales |
January |
February |
March |
April |
May |
|
Total Coffee sales (units) |
15,000 |
16,000 |
17,500 |
18,000 |
14,500 |
Your friend, Chris Coffee, has been running a successful coffee
shop for the last couple of years. He has asked you to put together
a cash budget. His regular accountant was too busy to help, but
told Chris his depreciation expense was going to be $1,800 per
year, using the straight-line method. He has supplied you with the
following information (above) to help you put together his cash
budget.
The revenue for a coffee is $5 for a large, $4 for a medium and $3
for a small. 50% of his sales are Large coffees, 25% medium and 25%
smalls. Chris has a deal with an accounting company and half of the
coffees sold are on account, the other half pay cash. The
accounting company pays for the coffees the month after the sale.
Assume credit sales are half of the total coffee sales.
Material and Labour information Chris has provided:
|
Large |
Medium |
Small |
|
|
Labour hours |
0.1 |
0.05 |
0.05 |
|
Coffee pods |
3 |
2 |
1 |
|
Cost of a Coffee pod |
$0.90 |
||
Labour is paid at $20/hour. The Coffee pods need to be ordered a
month in advance. He requires 10% of next months total coffee pods
to be on hand. The beginning coffee pod inventory, February 1, was
3,000 pods. 50% of the Coffee pods are paid in the month they are
ordered, 50% are paid the following month.
Other information Chris has provided:
|
February |
March |
April |
May |
|
|
Rent |
2,500 |
2,500 |
2,500 |
2,500 |
|
Dividend |
3,000 |
15,000 |
||
|
Office and Admin |
3,500 |
3,500 |
3,500 |
3,500 |
NOTE: Chris requires a minimum bank balance of $5,000 at the end of the month and the ending January bank balance is $10,000. Chris has access to a line of credit of $500,000 at an interest rate of 30%. Borrowings are made at the beginning of the month and repayments are made at the end of the month.
REQUIRED:
Using the Excel file included with the exam, for the months of February, March and April prepare
- Sales Budget, with a cash receipts.
- What is the A/R at the end of the month?
- Materials Budget, with cash disbursements.
- What is the A/P at the end of the month?
- Direct Labour Budget
- Cash budget
Solutions
Expert Solution
| Ans | Sales Budget | |||||
| Particulars | Feb | Mar | Apr | |||
| Estimated Sales | 16000 | 17500 | 18000 | |||
| Large (50%) | 8000 | 8750 | 9000 | |||
| Medium (25%) | 4000 | 4375 | 4500 | |||
| Small (25%) | 4000 | 4375 | 4500 | |||
| Revenue | ||||||
| Large ($5) | $ 40,000.00 | $ 43,750.00 | $ 45,000.00 | |||
| Medium ($4) | $ 16,000.00 | $ 17,500.00 | $ 18,000.00 | |||
| Small ($3) | $ 12,000.00 | $ 13,125.00 | $ 13,500.00 | |||
| Total Revenue | $ 68,000.00 | $ 74,375.00 | $ 76,500.00 | |||
| 50% Credit (Next Month) | $ 34,000.00 | $ 37,187.50 | $ 38,250.00 | |||
| 50% Cash | $ 34,000.00 | $ 37,187.50 | $ 38,250.00 | |||
| Cash Receipts | ||||||
| 50% Current Month Sales | $ 34,000.00 | $ 37,187.50 | $ 38,250.00 | |||
| 50% of previous Month Sales | $ 31,875.00 | $ 34,000.00 | $ 37,187.50 | |||
| Total Receipts | $ 65,875.00 | $ 71,187.50 | $ 75,437.50 | |||
| Jan Month Sales | 15000 | Sale Price | Revenue | |||
| Large (50%) | 7500 | $ 5.00 | $ 37,500.00 | |||
| Medium (25%) | 3750 | $ 4.00 | $ 15,000.00 | |||
| Small (25%) | 3750 | $ 3.00 | $ 11,250.00 | |||
| $ 63,750.00 | ||||||
| Credit Sales | $ 31,875.00 | |||||
| Feb | Mar | Apr | ||||
|
A/R at the end of Month (50% of Sales) |
$ 34,000.00 | $ 37,187.50 | $ 38,250.00 | |||
| Material Budgets | Jan | Feb | Mar | Apr | May | |
| Estimated Sales | 15000 | 16000 | 17500 | 18000 | 14500 | |
| Large (50%) | 7500 | 8000 | 8750 | 9000 | 7250 | |
| Medium (25%) | 3750 | 4000 | 4375 | 4500 | 3625 | |
| Small (25%) | 3750 | 4000 | 4375 | 4500 | 3625 | |
| Coffe Pods | ||||||
| Large (3) | 22500 | 24000 | 26250 | 27000 | 21750 | |
| Medium (2) | 7500 | 8000 | 8750 | 9000 | 7250 | |
| Small (1) | 3750 | 4000 | 4375 | 4500 | 3625 | |
| Total Coffe PODs consumption | 33750 | 36000 | 39375 | 40500 | 32625 | |
| Opening Stock | 3375 | 3000 | 3938 | 4050 | 3262.5 | |
| Closing Stock Required | 3000 | 3938 | 4050 | 3263 | ||
| No. of Coffee Pods to be procured | 33375 | 36938 | 39488 | 39713 | ||
| Price | $ 0.90 | $ 0.90 | $ 0.90 | $ 0.90 | ||
| Cost | $ 30,037.50 | $ 33,243.75 | $ 35,538.75 | $ 35,741.25 | ||
| Cash Disbursements | ||||||
| 50% Paid in cash | $ 15,018.75 | $ 16,621.88 | $ 17,769.38 | $ 17,870.63 | ||
| 50% of Previous Month | $ 15,018.75 | $ 16,621.88 | $ 17,769.38 | |||
| $ 31,640.63 | $ 34,391.25 | $ 35,640.00 | ||||
| Feb | Mar | Apr | ||||
| A/P at the end of the Month | $ 16,621.88 | $ 17,769.38 | $ 17,870.63 | |||
| Direct Labour Budget | ||||||
| Estimated Sales | 16000 | 17500 | 18000 | |||
| Large (50%) | 8000 | 8750 | 9000 | |||
| Medium (25%) | 4000 | 4375 | 4500 | |||
| Small (25%) | 4000 | 4375 | 4500 | |||
| Labour Hour | ||||||
| Large (0.1) | 800 | 875 | 900 | |||
| Medium (0.05) | 200 | 218.75 | 225 | |||
| Small (0.05) | 200 | 218.75 | 225 | |||
| Total | 1200 | 1312.5 | 1350 | |||
Total
 ekkarill92 answered 2 years agoRelated SolutionsEstimated sales January February March April May Total Coffee sales (units) 15,000 16,000 18,000 17,500 14,500...Estimated sales January February March April May
Total Coffee
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shop for the last couple of years. He has
asked you to put together a cash budget. His regular accountant was
too busy to help, but told Chris his
depreciation expense was going to be $9,000 per year, using the
straight-line method. He has supplied
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16,000
17,500
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