Exercise 21-14

Danner Company expects to have a cash balance of $47, 656 on January 1. 2014. Relevant monthly budget data for the first 2 months of 2014 are as follows. Collections from customers: January $88, 060, February $155, 400. Payments for direct materials: January $51, 800, February $72, 520. Direct labor: January $31, 080, February $46, 620. Wages are paid in the month they are incurred. Manufacturing overhead: January $21, 756, February $25, 900. These costs include depreciation of $1, 036 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $15, 540, February $20, 720. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable security in January are expected to realize $10, 360 In cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $25, 900. The company wants to maintain a minimum monthly cash balance of $20, 720. Prepare a cash budget for January and February