You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new
Question:
You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021.
R R
Unit selling price 160
Less: Direct materials 50
Direct labour 30
Fixed Overheads:
Admin 4.00
Rent 7.50
Rates 2.50
Depreciation 1.00 95
Mark up 65
Your initial plan is to produce 200 units per month and to start selling in August 2021. The forecast of sales you have calculated is:
August September October November December
Unit 50 80 120 180 200
All sales will be made on 30 days credit.
Machinery will cost you R24, 000. This you propose financing on hire purchase terms; deposit payable July 1, 2021, R2,400; followed by 24 monthly instalments of R1,000 each. Raw materials suppliers will deliver an equal amount of parts at the beginning of each month. They will allow you 60 days credit.
Wages and administrative expenses will be paid in the month in which they are incurred. Rent and rates of the premises will be paid quarterly in advance commencing on July1, 2021.
REQUIRED:
Prepare cash budget for the 6 months to December 31, 2021 for presentation to your bank manager who you hope will be prepared to give you an overdraft facility to supplement the R20,000 you intend introducing into your business
(a) Calculate the closing balance for December.
Expert Answer:
Answer Step by Step Explanation Step 1 Given Information Overdraft Facility R20000 Wages per month R... View the full answer
