La Belle Pâtisserie in Lyon, France, relies on budgeting to manage its pastry manufacturing and sales operations. Assume that La Belle Pâtisserie prepares monthly cash budgets. Relevant data from assumed operating budgets for 2021 are as follows: January February Sales € 460,000 € 412,000 Direct material purchases 185,000 210,000 Direct labor 70,000 85,000 Manufacturing overhead 50,000 65,000 Selling and administrative expenses 85,000 95,000 Assume that La Belle sells pastry in its own shops as well as to other stores. Collections are expected to be 75% in the month of sale, and 25% in the month following sale. La Belle pays 60% of direct materials purchases in cash in the month of purchase, and the balance due in the month following the purchase. All other items above are paid in the month incurred. (Depreciation has been excluded from manufacturing overhead and selling and administrative expenses.) Other data: (1) Sales: December 2020, € 320,000 (2) Purchases of direct materials: December 2020, € 175,000 (3) Other receipts: January—First quarter COVID-19 small business relief subsidy from Lyon City Government, € 2,000 February—Sale of used equipment, € 4,000 (4) Other disbursements: February—Purchased equipment, € 10,000 (5) Repaid debt: January, € 30,000 The company’s cash balance on January 1, 2021, is expected to be € 50,000. The company wants to maintain a minimum cash balance of € 45,000. Instructions 1. Prepare schedules for A. Expected collections from customers B. Expected payments for direct materials purchases for January and February 2. Prepare a cash budget for January and February in tabular format.
La Belle Pâtisserie in Lyon, France, relies on budgeting to manage its pastry manufacturing and sales operations. Assume that La Belle Pâtisserie prepares monthly cash budgets. Relevant data from assumed operating budgets for 2021 are as follows:
January February
Sales € 460,000 € 412,000
Direct material purchases 185,000 210,000
Direct labor 70,000 85,000
Manufacturing overhead 50,000 65,000
Selling and administrative expenses 85,000 95,000
Assume that La Belle sells pastry in its own shops as well as to other stores. Collections are expected to be 75% in the month of sale, and 25% in the month following sale. La Belle pays 60% of direct materials purchases in cash in the month of purchase, and the balance due in the month following the purchase. All other items above are paid in the month incurred. (
Other data:
(1) Sales: December 2020, € 320,000
(2) Purchases of direct materials: December 2020, € 175,000
(3) Other receipts: January—First quarter COVID-19 small business relief subsidy from
Lyon City Government, € 2,000
February—Sale of used equipment, € 4,000
(4) Other disbursements: February—Purchased equipment, € 10,000
(5) Repaid debt: January, € 30,000
The company’s cash balance on January 1, 2021, is expected to be € 50,000. The company wants to maintain a minimum cash balance of € 45,000.
Instructions
1. Prepare schedules for
A. Expected collections from customers
B. Expected payments for direct materials purchases for January and February
2. Prepare a
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