# Question: Bombs Away Video Games Corporation has forecasted the following monthly

Bombs Away Video Games Corporation has forecasted the following monthly sales:
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Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for \$5 per unit and costs \$2 per unit to produce. A level production policy is followed. Each monthâ€™s production is equal to annual sales (in units) divided by 12.
Of each monthâ€™s sales, 30 percent are for cash and 70 percent are on account. All accounts receivable are collected in the month after the sale is made.
a. Construct a monthly production and inventory schedule in units. Beginning inventory in January is 25,000 units. (Note: To do part a, you should work in terms of units of production and units of sales.)
b. Prepare a monthly schedule of cash receipts. Sales in the December before the planning year are \$100,000. Work part b using dollars.
c. Determine a cash payments schedule for January through December. The production costs of \$2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are \$45,000 per month.
d. Prepare a monthly cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is \$5,000, which is also the minimumdesired.
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• CreatedOctober 14, 2014
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