Forecast sales for each month are expected to be: (i) 80% to be for cash. (ii) the remaining 20% of sales are trade receivables, and these will be received in the month after the sale Purchases of materials in each month are expected to be 70% of the following month’s sales value and are paid two months after the sale. 

The following costs are expected to be paid for in the month in which they occur: 

(i) direct labour $7,000 per month to 31 July and $7,500 per month thereafter. 

(ii) fixed costs $3,000 per month. (iii) other variable costs are 10% of each month’s forecast sales The bank balance as at 1 March was $12,100. 

Prepare a cash budget, including sales, variable costs, fixed costs, and bank balance for April, May, June, July, August, and September.

Answer rating: 100% (QA)

Cash Budget April May June July August and September April Sales Cash Sales 80 of forecast sales 80 x Forecast Sales Trade Receivables 20 of forecast sales 20 x Forecast Sales Purchases 70 of the foll... View the full answer