From the following information which relates to George and Zola Co you are required to Ø prepare a month by month cash flow forecast for the second half of 2015 and to append such Ø brief comments as you consider might be helpful to management. Ø Ø (a) The company’s only product, a vest, sells at $200 and has a variable cost of $50 made up of material $25, labour $15 and overhead $10. Ø Ø (b) Fixed costs of $10,000 per month are paid on the 28th of each month. Ø Ø (c) Quantities sold/to be sold on credit Ø May June July Aug Sept Oct Nov Dec Ø 3,000 1,400 1,800 1,600 1,800 2,000 1,200 2,200 Ø (d) Production Quantities Ø May June July Aug Sept Oct Nov Dec Ø 2,200 1,400 1,600 2,200 2,400 2,600 2,400 2,100 Ø Ø (e) Cash sales at a discount of 8% are expected to average 240 units a month Ø (f) Customers settled their accounts at the end of the month of sale. Ø (g) Suppliers of material are paid two months after the material is used in production Ø (h) Wages are paid in the same month as they are incurred Ø (i) 30% of the variable overhead is paid in the month of production, the remainder in the following month Ø (j) Corporation tax $18,000 is to be paid in four instalments May, June , September, and December Ø A new delivery vehicle was bought in July 2015. It cost $8,000 and is to be paid for in August the next year. An old vehicle was sold for $1600, the buyer undertaking to pay in July2015. Ø (l) The company is expected to have debit $30,000 cash at the bank at 30 June 2015 Ø (m) No increases or decreases in raw materials, work in progress or finished goods are planned over the period. Ø
Ø From the following information which relates to George and Zola Co you are required to
Ø prepare a month by month cash flow
Ø brief comments as you consider might be helpful to management.
Ø
Ø (a) The company’s only product, a vest, sells at $200 and has a variable cost of $50 made up of material $25, labour $15 and overhead $10.
Ø
Ø (b) Fixed costs of $10,000 per month are paid on the 28th of each month.
Ø
Ø (c) Quantities sold/to be sold on credit
Ø May June July Aug Sept Oct Nov Dec
Ø 3,000 1,400 1,800 1,600 1,800 2,000 1,200 2,200
Ø (d) Production Quantities
Ø May June July Aug Sept Oct Nov Dec
Ø 2,200 1,400 1,600 2,200 2,400 2,600 2,400 2,100
Ø
Ø (e) Cash sales at a discount of 8% are expected to average 240 units a month
Ø (f) Customers settled their accounts at the end of the month of sale.
Ø (g) Suppliers of material are paid two months after the material is used in production
Ø (h) Wages are paid in the same month as they are incurred
Ø (i) 30% of the variable overhead is paid in the month of production, the remainder in the following month
Ø (j) Corporation tax $18,000 is to be paid in four instalments May, June , September, and December
Ø A new delivery vehicle was bought in July 2015. It cost $8,000 and is to be paid for in August the next year. An old vehicle was sold for $1600, the buyer undertaking to pay in July2015.
Ø (l) The company is expected to have debit $30,000 cash at the bank at 30 June 2015
Ø (m) No increases or decreases in raw materials, work in progress or finished goods are planned over the period.
Ø
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