Cash Flow Budget Parameters: Sales: Qtr 4 Units 50,000 Price $ 18.00 Required pr

Question

Cash Flow Budget Parameters: Sales: Qtr 4 Units                        50,000 Price $                      18.00 Required production - units                        56,000 Raw materials required per unit (lbs)                                   5 Cost per pound $                         0.80 Direct labor hours required per unit                             0.40 Direct labor rate per hour $ $                      15.00 Manufacturing overhead: 1.Variable: direct labor hours is the cost driver @ 10.00 per hour paid in quarter incurred. 2. Fixed over head is $300,000 per quarter of    which 25% are noncash charges. Sales and administration: 1. Variable expenses are 5% of sales dollars.    paid in the quarter incurred. 2. Fixed expenses are $240,000, 10% of which         are noncash charges. Other information: 1. Beginning cash balance $              50,000.00 2. beginning accounts receivable $            200,000.00 3. Beginning accounts payable: a. raw materials $              85,000.00 b. manufacturing overhead $              56,250.00 c. Sales and administration $              54,000.00 d. sales are collected 75% in qtr. sold and 25%      qtr. following. e. raw material purchases are paid 75% in qtr.    purchased and 25% qtr. Following f. All variable expenses are paid in the qtr.     incurred. g. All fixed cash expenses are paid 75% in qtr. incurred and 25% qtr following. h. Minimum cash balance required                        10,000 i. Equipment purchases in 4th quarter                        50,000 j. Short term borrowing required to maintain minimum cash balance is repaid in the quarter following; the interest rate is 2.5% per quarter. Borrowings must be in $5,000 increments. REQUIRED: 1. Prepare a cash budget for the 4th quarter. 2. Calculate the ending 4th quarter balance    in accounts receivable. 2. Calculate the ending 4th quarter balance    in accounts payable. Cash Flow Budget Parameters: Sales: Qtr 4 Units                        50,000 Price $                      18.00 Required production - units                        56,000 Raw materials required per unit (lbs)                                   5 Cost per pound $                         0.80 Direct labor hours required per unit                             0.40 Direct labor rate per hour $ $                      15.00 Manufacturing overhead: 1.Variable: direct labor hours is the cost driver @ 10.00 per hour paid in quarter incurred. 2. Fixed over head is $300,000 per quarter of    which 25% are noncash charges. Sales and administration: 1. Variable expenses are 5% of sales dollars.    paid in the quarter incurred. 2. Fixed expenses are $240,000, 10% of which         are noncash charges. Other information: 1. Beginning cash balance $              50,000.00 2. beginning accounts receivable $            200,000.00 3. Beginning accounts payable: a. raw materials $              85,000.00 b. manufacturing overhead $              56,250.00 c. Sales and administration $              54,000.00 d. sales are collected 75% in qtr. sold and 25%      qtr. following. e. raw material purchases are paid 75% in qtr.    purchased and 25% qtr. Following f. All variable expenses are paid in the qtr.     incurred. g. All fixed cash expenses are paid 75% in qtr. incurred and 25% qtr following. h. Minimum cash balance required                        10,000 i. Equipment purchases in 4th quarter                        50,000 j. Short term borrowing required to maintain minimum cash balance is repaid in the quarter following; the interest rate is 2.5% per quarter. Borrowings must be in $5,000 increments. REQUIRED: 1. Prepare a cash budget for the 4th quarter. 2. Calculate the ending 4th quarter balance    in accounts receivable. 2. Calculate the ending 4th quarter balance    in accounts payable.

Explanation / Answer

Cash Flow Budget Parameters: Sales: Qtr 4 Units 50,000 Price $ 18.00 Required pr

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