Danner Company expects to have a cash balance of $48,576 on January 1, 2014. Relevant monthly budget data for the first 2 months of 2014 are as follows.
Collections from customers: January $89,760, February $158,400.
Payments for direct materials: January $52,800, February $73,920.
Direct labor: January $31,680, February $47,520. Wages are paid in the month they are incurred.
Manufacturing overhead: January $22,176, February $26,400. These costs include depreciation of $1,056 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $15,840, February $21,120. These costs are exclusive of depreciation. They are paid as incurred.
Sales of marketable securities in January are expected to realize $10,560 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $26,400. The company wants to maintain a minimum monthly cash balance of $21,120.
Prepare a cash budget for January and February.