Cash and Production Budget. P sells a single specialty product imported from Denmark. Sales for the six months ended Dec31 are as follows.
July 50,000 units actual
August 70,000 actual
September 90,000 forecast
October 80,000 forecast
November 60,000 forecast
December 40,000 forecast
Each unit sells for $18. All sales are on credit. Collections on account take the following pattern.
Collected in month of sales 40%
Collected in month after sale 35%
Collected in the second month following sale 20%
Uncollectible 5%
P maintains an ending inventory equal to 100% of the next month's sales. The cost of the units is $12 each. All purchases are on credit. The payables are paid60% in the month of purchase and 40% in the following month. Cash operating expenses are equal to $200,000 plus 15% of current month's sales.
The actual inventory on hand was:
July 31 105,000 units
August 31 135,000 units
Calculate units purchased for August and September. (Production Budgets)
Calculate collections for September.(Collection Budget)
Prepare a cash budget for September Beginning cash balance in September is $200,000.
Production Budget August Production Budget September
Receipts Budget September Cash Budget September