Hun Industries has the following financial information: Sales are forecasted as follows: March $42,000 April $44,000 May
Question:
Hun Industries has the following financial information: Sales are forecasted as follows:
March $42,000
April $44,000
May $46,000
June $50,000
July $45,000
August $42,000
September $43,000
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.
Financial Accounting Tools for Business Decision Making
ISBN: 978-0470239803
5th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso