a) Prepare an analysis of cash requirements for the following: Purchases for the year for BBCCs
Question:
a) Prepare an analysis of cash requirements for the following:
• Purchases for the year for BBCC’s most costly source of direct ingredients — vanilla flavouring. Base this on the 20X8 forecast sales, the budgeted costs for BBCC’s three products and BBCC’s paying habits in Exhibit 8. Note: Show all supporting schedules and calculations — include production budget, direct material usage budget — vanilla, direct material purchase budget — vanilla and cash disbursement schedule for vanilla purchase. Round quantities to litres.
• Cash requirements for the systems upgrade. Base this on the budget provided in Table 4 in Exhibit 8 and the consultant’s estimated payments as outlined in the exhibit. Prepare a quarterly cash budget.
b) Comment on cash requirements. Consider that BBCC attempts to keep enough cash on hand per quarter to deal with a maximum cash flow demand of $23,000 for these direct ingredients purchases. Consider how much more cash BBCC will need to have on hand to cover the maximum cash flow demand during a quarter for the information technology project.
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain