Carol's Chocolate Company has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $49,000 $39,700 $47,000 Cash payments: Purchases of direct materials 31,000 21,400 17,000 Operating expenses 12,200 8,700 11,700 Capital expenditures 13,100 24,400 0 The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August
Carol's Chocolate Company has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $49,000 $39,700 $47,000 Cash payments: Purchases of direct materials 31,000 21,400 17,000 Operating expenses 12,200 8,700 11,700 Capital expenditures 13,100 24,400 0 The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Question
Carol's Chocolate Company has prepared its third quarter budget and provided the following data:
|
|
Jul
|
Aug
|
Sep
|
|
Cash collections
|
$49,000
|
$39,700
|
$47,000
|
|
Cash payments:
|
|
|
|
|
Purchases of direct materials
|
31,000
|
21,400
|
17,000
|
|
Operating expenses
|
12,200
|
8,700
|
11,700
|
|
Capital expenditures
|
13,100
|
24,400
|
0
|
The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August.
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