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.

Explanation / Answer

2. 4th Quarter ending AR Balance is as calculated as under:

Closing Balance AR

Hope this will help.

1. Cash Budget Opening Balance 50,000 Add : cash received from AR 875,000 Less : Equipment purchased -50,000 Cash out for Acounts Payable (refer Point 3 below) -852,750 Closing Balance required -10,000 Excess cash for the quarter - Q4 12,250

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.