REQUIRED Use the information given below to prepare the Cash Budget for each of the first three months of operations (i.e. January, February, March 2024). Use separate monetary columns for each month. INFORMATION The following information relates to Baby Manufacturers which will commence business on 01 January 2024 with R750 000 cash: 1. New machinery and equipment will be purchased on 02 January 2024 for R300 000. A deposit of 20% will be paid immediately. The balance of the debt as well as finance charges of R18 000 will be paid in 12 equal instalments commencing February 2024. 2. Production will commence on 05 January 2024 and 30% of the sales for February's will be manufactured in January. Each month thereafter the production will consist of 70% of the current month's sales and 30% of the following month's sales. 3. Estimated sales at R72 per unit are as follows: January February March April Units 0 8 500 11 000 10 500 4. Cash sales are expected to comprise 60% of the total sales. A cash discount of 10% will be granted to these customers. The balance of the sales will be on credit. Thirty percent (30%) of the amount owing is expected to be received in the month of the sale and the balance in the month after the sale. 5. Variable manufacturing costs per unit are estimated as follows: Direct materials Direct labour Overheads R30 R16 R12 6. Direct materials will be purchased to meet the production requirements of each month. Sixty percent (60%) of the purchases is expected to be for cash and the balance on credit. Creditors are expected to be paid in the month after the purchase. 7. Direct labour costs are settled monthly. 8. Variable manufacturing overheads will be paid in the month in which they are incurred. 9. Fixed costs, excluding depreciation of R5 000 per month, are expected to amount to R40 000 per month and the fixed costs are paid monthly.
REQUIRED Use the information given below to prepare the Cash Budget for each of the first three months of operations (i.e. January, February, March 2024). Use separate monetary columns for each month. INFORMATION The following information relates to Baby Manufacturers which will commence business on 01 January 2024 with R750 000 cash: 1. New machinery and equipment will be purchased on 02 January 2024 for R300 000. A deposit of 20% will be paid immediately. The balance of the debt as well as finance charges of R18 000 will be paid in 12 equal instalments commencing February 2024. 2. Production will commence on 05 January 2024 and 30% of the sales for February's will be manufactured in January. Each month thereafter the production will consist of 70% of the current month's sales and 30% of the following month's sales. 3. Estimated sales at R72 per unit are as follows: January February March April Units 0 8 500 11 000 10 500 4. Cash sales are expected to comprise 60% of the total sales. A cash discount of 10% will be granted to these customers. The balance of the sales will be on credit. Thirty percent (30%) of the amount owing is expected to be received in the month of the sale and the balance in the month after the sale. 5. Variable manufacturing costs per unit are estimated as follows: Direct materials Direct labour Overheads R30 R16 R12 6. Direct materials will be purchased to meet the production requirements of each month. Sixty percent (60%) of the purchases is expected to be for cash and the balance on credit. Creditors are expected to be paid in the month after the purchase. 7. Direct labour costs are settled monthly. 8. Variable manufacturing overheads will be paid in the month in which they are incurred. 9. Fixed costs, excluding depreciation of R5 000 per month, are expected to amount to R40 000 per month and the fixed costs are paid monthly.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 5PB: Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for...
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Question
Transcribed Image Text:REQUIRED
Use the information given below to prepare the Cash Budget for each of the first three months of
operations (i.e. January, February, March 2024). Use separate monetary columns for each month.
INFORMATION
The following information relates to Baby Manufacturers which will commence business on 01
January 2024 with R750 000 cash:
1. New machinery and equipment will be purchased on 02 January 2024 for R300 000. A deposit
of 20% will be paid immediately. The balance of the debt as well as finance charges of R18 000
will be paid in 12 equal instalments commencing February 2024.
2. Production will commence on 05 January 2024 and 30% of the sales for February's will be
manufactured in January. Each month thereafter the production will consist of 70% of the
current month's sales and 30% of the following month's sales.
3. Estimated sales at R72 per unit are as follows:
January
February
March
April
Units
0
8 500
11 000
10 500
4. Cash sales are expected to comprise 60% of the total sales. A cash discount of 10% will be
granted to these customers. The balance of the sales will be on credit. Thirty percent (30%) of
the amount owing is expected to be received in the month of the sale and the balance in the
month after the sale.
5. Variable manufacturing costs per unit are estimated as follows:
Direct materials
Direct labour
Overheads
R30
R16
R12
6. Direct materials will be purchased to meet the production requirements of each month. Sixty
percent (60%) of the purchases is expected to be for cash and the balance on credit. Creditors
are expected to be paid in the month after the purchase.
7. Direct labour costs are settled monthly.
8. Variable manufacturing overheads will be paid in the month in which they are incurred.
9. Fixed costs, excluding depreciation of R5 000 per month, are expected to amount to R40 000
per month and the fixed costs are paid monthly.
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