Draw up a cash budget for Amben Ltd showing the balance at the end of each month
Question:
Draw up a cash budget for Amben Ltd showing the balance at the end of each month from the following information for the six months ended 31 December 2022
a. Opening cash balance (including bank) balance $21,200
b. Production in units: April 240, May 270, June 300, July 320, August 350, Sep 370, Oct 380, Nov 340, Dec 310, Jan 2011, 260, Feb, 250.
c. Raw materials used in production cost $5 per unit. Of this 80% is paid in the month of production and 20% in the month after production.
d. Direct labour costs of $8 per unit are payable in the month of production.
e. Variable expenses are $2 per unit, payable one-half in the same month as production and one-half in the month following production.
f. Sales at $40 per unit: Mar 260, Apr 200, May 320, Jun 290, Jul 400, Aug 300, Sep 350, Oct 400 Nov 390 Dec 400 Debtors to pay their accounts three months after the month in which sales are made.
g. Fixed expenses of $400 per month payable each month.
h. Machinery costing $2,000 to be paid for in October 2022
i. Will receive a legacy of $2,500 in December 2022 j. Drawings to be $300 per month.
