Esquire Products Inc. expects the following monthly
sales:
January | $ | 33,000 | July | $ | 27,000 |
February | 24,000 | August | 31,000 | ||
March | 17,000 | September | 34,000 | ||
April | 19,000 | October | 39,000 | ||
May | 13,000 | November | 47,000 | ||
June | 11,000 | December | 29,000 | ||
Total sales = $324,000 | |||||
Cash sales are 40 percent in a given month, with the remainder
going into accounts receivable. All receivables are collected in
the month following the sale. Esquire sells all of its goods for $2
each and produces them for $1 each. Esquire uses level production,
and average monthly production is equal to annual production
divided by 12.
a. Generate a monthly production and inventory
schedule in units. Beginning inventory in January is 17,000
units.
b. Prepare a cash receipts schedule for January
through December. Assume that dollar sales in the prior December
were $20,000
c. Prepare a cash payments schedule for January
through December. The production costs ($1 per unit produced) are
paid for in the month in which they occur. Other cash payments
(besides those for production costs) are $7,900 per month.
d. Construct a cash budget for January through
December using the cash receipts schedule from part b and
the cash payments schedule from part c. The beginning cash
balance is $3,000, which is also the minimum desired.
(Negative amounts should be indicated by a minus
sign.)
e. Determine total current assets for each month.
Include cash, accounts receivable, and inventory. The accounts
receivable for a given month is equal to 60 percent of that month's
sales. Inventory is equal to ending inventory (part a)
times the cost of $1 per unit.
Basis the given annual sales budget, the following table is drawn
Sales price per unit = $2
Month | Unit |
Sales per month (given) |
Unit |
Quantity sold per month (Sales per month/sales price per unit) |
||
January | $ | 33000 | qty | 16500 | ||
February | 24000 | 12000 | ||||
March | 17000 | 8500 | ||||
April | 19000 | 9500 | ||||
May | 13000 | 6500 | ||||
June | 11000 | 5500 | ||||
July | 27000 | 13500 | ||||
August | 31000 | 15500 | ||||
September | 34000 | 17000 | ||||
October | 39000 | 19500 | ||||
November | 47000 | 23500 | ||||
December | 29000 | 14500 | ||||
Total | 324000 | 162000 |
Therefore, total quantity sold in the year is expected to be 162000 units.
Therefore monthly production = Annual / 12 = 162000 / 12 = 13500 units produced per month.
Production & Inventory schedule
January | February | March | April | May | June | July | August | September | October | November | December | ||
Opening Inventory | 17000 | 14000 | 15500 | 20500 | 24500 | 31500 | 39500 | 39500 | 37500 | 34000 | 28000 | 18000 | |
(+) Monthly Production (computed above) | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | |
(-) Monthly sales (from above table) | (16500) | (12000) | (8500) | (9500) | (6500) | (5500) | (13500) | (15500) | (17000) | (19500) | (23500) | (14500) | |
Monthly Closing Inventory | 14000 | 15500 | 20500 | 24500 | 31500 | 39500 | 39500 | 37500 | 34000 | 28000 | 18000 | 17000 |
Cash receipts in a month = 40% of sales of current month + 60% of sales of previous month
Cash receipts schedule:
January | February | March | April | May | June | July | August | September | October | November | December | ||
$ Sale of the month | 33000 | 24000 | 17000 | 19000 | 13000 | 11000 | 27000 | 31000 | 34000 | 39000 | 47000 | 29000 | |
(A) Cash sales = 40% of current month | 13200 | 9600 | 6800 | 7600 | 5200 | 4400 | 10800 | 12400 | 13600 | 15600 | 18800 | 11600 | |
(B) Accounts Receivables = 60% of sale of current month | 19800 | 14400 | 10200 | 11400 | 7800 | 6600 | 16200 | 18600 | 20400 | 23400 | 28200 | 17400 | |
(C) Cash receipt for Accounts receivable1 |
20000 * 0.6= 12000 |
19800 | 14400 | 10200 | 11400 | 7800 | 6600 | 16200 | 18600 | 20400 | 23400 | 28200 | |
Total Cash receipts for month (A + C) | 25200 | 29400 | 21200 | 17800 | 16600 | 12200 | 17400 | 28600 | 32200 | 36000 | 42200 | 39800 |
160% of sales of previous month = Accounts receivables of previous month
Cost of production = $1 * monthly production
Cash payment schedule:
January | February | March | April | May | June | July | August | September | October | November | December | ||
Monthly production | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | |
(A) Cost of production | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | 13500 | |
(B) Other payments | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | 7900 | |
Total Cash Payments (A + B) | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 | 21400 |
Cash Budget
January | February | March | April | May | June | July | August | September | October | November | December | ||
Opening Cash balance (A) | 3000 | 6800 | 14800 | 14600 | 11000 | 6200 | (3000) | (7000) | 200 | 11000 | 25600 | 46400 | |
(+) Cash receipts (B) | 25200 | 29400 | 21200 | 17800 | 16600 | 12200 | 17400 | 28600 | 32200 | 36000 | 42200 | 39800 | |
(-) Cash payments (C) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | (21400) | |
Closing cash balance (A + B - C) | 6800 | 14800 | 14600 | 11000 | 6200 | (3000)* | (7000)* | 200* | 11000 | 25600 | 46400 | 64800 |
*Since, minimum cash balance requirement of $3000 is breached, Esquire shall be required to take a short term loan here.
Current Assets schedule:
January | February | March | April | May | June | July | August | September | October | November | December | ||
Cash | 6800 | 14800 | 14600 | 11000 | 6200 | (3000) | (7000) | 200 | 11000 | 25600 | 46400 | 64800 | |
Accounts Receivables | 19800 | 14400 | 10200 | 11400 | 7800 | 6600 | 16200 | 18600 | 20400 | 23400 | 28200 | 17400 | |
Inventory (Closing Inventory * $1) | 14000 | 15500 | 20500 | 24500 | 31500 | 39500 | 39500 | 37500 | 34000 | 28000 | 18000 | 17000 | |
Total Current Assets | 12600 | 44700 | 45300 | 46900 | 45500 | 43100 | 48700 | 56300 | 65400 | 77000 | 92600 | 99200 |
Esquire Products Inc. expects the following monthly sales: January $ 33,000 July $ 27,000 February 24,000...
Esquire Products Inc. expects the following monthly sales: January $ 31,000 July $ 25,000 February 22,000 August 29,000 March 15,000 September 32,000 April 17,000 October 37,000 May 11,000 November 45,000 June 9,000 December 27,000 Total sales = $300,000 Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each. Esquire...
Esquire Products Inc. expects the following monthly sales: January February March April May June $ 38,000 July 29,000 August 22,000 September 24,000 October 18.ee November 16,eee December Total sales = $384,cee $ 32,000 36,000 39,000 44,000 52,00 34, eee Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each....
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 104,000 July $ 49,000 February 97,000 August 49,000 March 29,000 September 59,000 April 29,000 October 89,000 May 24,000 November 109,000 June 39,000 December 127,000 Total annual sales = $804,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual...
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 101,000 July $ 46,000 February 94,000 August 46,000 March 26,000 September 56,000 April 26,000 October 86,000 May 21,000 November 106,000 June 36,000 December 124,000 Total annual sales = $768,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to...
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 110,000 July $ 55,000 February 103,000 August 55,000 March 35,000 September 65,000 April 35,000 October 95,000 May 30,000 November 115,000 June 45,000 December 133,000 Total annual sales = $876,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual...
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 106,000 July $ 51,000 February 99,000 August 51,000 March 31,000 September 61,000 April 31,000 October 91,000 May 26,000 November 111,000 June 41,000 December 129,000 Total annual sales = $828,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to...
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $103,000 July $ 48,000 February 96,000 August 48,000 March 28,000 September 58,000 April 28,000 October 88,000 May 23,000 November 108,000 June 38,000 December 126,000 Total annual sales = $792,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales...
Bombs Away Video Games Corporation has forecasted the following monthly sales January $107,000 July February100,000 August March $ 52,000 52,000 32,000 September 62,000 92,000 27,000 November 112,000 42,000 December 130,000 ril May June 32,000 October Total annual sales $840,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units)...
Bombs Away Video Games Corporation has forecasted the following monthly sales S 99,000 July $ 44,000 44,000 54,000 84,000 104,000 122,000 January February March ril May June 92,000 August 24,000September 24,000 October 19,000 November 34,000 December Total annual sales $744,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in...
Bombs Away Video Games Corporation has forecasted the following monthly sales: January February March April May June $ 101,000 $101,0 July $ 46,000 94,000 August 46,000 26,000 September 56,000 26,000 October 86,000 21,000 November 106,000 36,000 December 124,000 Total annual sales = $768,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to...