Create a cash budget (use dynamic arrays where possible) for June to September 2023 for Good Food Services, a small food provider to retail outlets. The staff of the firm has compiled the following set of assumptions and forecasts to be used in the cash budgeting process:

Actual and expected sales through to October are as follows:

Month	*April	*May	June	July	August	Sept	October
Sales	220,000	230,000	350,000	380,000	340,000	300,000	250,000

Note: * April and May sales are actual

50% of sales are for cash. Of the remaining 50% of sales, 70% is collected in the following month and 30% is collected two months after the sale.

Raw materials inventory purchases are equal to 50% of the following month’s sales (e.g., June purchases are 50% of expected July sales). 60% of purchases are paid for in the month following the purchase, and the remainder are paid in the following month.

Wages are forecast to be equal to 25% of expected sales.

create a cash budget (use dynamic arrays where possible) for June to September 2023 for Good Food Services, a small food provider to retail outlets. The staff of the firm has compiled the following set of assumptions and forecasts to be used in the cash budgeting process:

Actual and expected sales through to October are as follows:

Month	*April	*May	June	July	August	Sept	October
Sales	220,000	230,000	350,000	380,000	340,000	300,000	250,000

Note: * April and May sales are actual

50% of sales are for cash. Of the remaining 50% of sales, 70% is collected in the following month and 30% is collected two months after the sale.

Raw materials inventory purchases are equal to 50% of the following month’s sales (e.g., June purchases are 50% of expected July sales). 60% of purchases are paid for in the month following the purchase, and the remainder are paid in the following month.

Wages are forecast to be equal to 25% of expected sales.

Payments for leases for equipment are $15,000 per month.

Tax payments of $20,000 will be paid in June and September

$250,000 is scheduled to be paid in July for capital investment, but management is flexible on the scheduling of this outlay. Use the Scenario Manager to show the optimal month for the investment.

Good Food Services must keep a minimum cash balance of $15,000 by agreement with its bank. Its cash balance at the end of May was $20,000.

Use the Scenario Manager function to demonstrate to management the impact on the budget and borrowing amount if the firm was able to reduce its raw materials inventory purchases to 45% and 40% of the following month’s sales. No change to a payment plan (i.e. 60% of purchases are paid for in the month following the purchase, and the remainder are paid in the following month)

Answer rating: 100% (QA)

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