Question

1. Please use the following information to develop a cash budget for January and February:

January February

Beginning balance of cash $ 25,000 ?

Cash collections from customers 150,000 200,000

Cash payments 205,000 110,000

Minimum cash balance at end of each month $20,000

Money is assumed to be borrowed at the beginning of any month when it is needed and paid back at the end of any month when it can be paid back. Interest is paid in the month when the amount borrowed is repaid. Interest rate is 18% per year.

2. During the month of May a company expects to produce 5,000 tables and sell 4,000 tables. Create the direct labor budget for May, assuming that it takes 3 hours of direct labor to produce a table and the workers are paid $24 per hour.

3. During the month of May a company expects to produce 5,000 tables and sell 4,000 tables. Create the manufacturing overhead budget for May, using the information shown below. Be sure to include both the total cost and the amount paid for manufacturing overhead.

Variable costs:

Indirect materials $5 per unit

Indirect labor $9 per unit

Electricity $4 per unit

Fixed costs:

Depreciation $9,000 per month

Insurance $2,000 per month

Indirect labor $8,000 per month

Electricity $1,000 per month

4. During the month of May a company expects to produce 5,000 tables and sell 4,000 tables. Create the operating expense budget for May, using the information shown below. Be sure to include both the total cost and the amount paid for operating expenses.

Credit sales for May: $300,000

Variable costs:

Sales commission expense $6 per unit

Shipping expense $8 per unit

Bad debt expense 2% of credit sales

Fixed costs:

Depreciation $8,000 per month

Salaries $12,000 per month

Rent $3,000 per month

Advertising $4,000 per month

Answer 1