Yeahman $10,000 in cash on hand on January 1 and has collected the following budget data: January February Sales $526,000 $568,000 Cash receipts from customers 442,500 503,000 Cash payments for direct materials purchases 180,856 160,412 Direct labor costs 134,980 113,348 Manufacturing overhead costs (includes depreciation of $1,700 per month) 55,534 53,124 Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yeaman has cash payments for selling and administrative expenses including salaries of $40,000 per month plus commissions that are 11% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,000. Begin by preparing the cash budget for January, Yeaman Company Cash Budget Two Months Ended January 31 and February 28 January Beginning cash balance Cash receipts Cash available Cash payments: Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (deficiency) Financing: Borrowing Principal repayments Total effects of financing Ending cash balance
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Yeahman $10,000 in cash on hand on January 1 and has collected the following budget data:
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January
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February
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Sales
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$526,000
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$568,000
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Cash receipts from customers
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442,500
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503,000
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Cash payments for direct materials purchases
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180,856
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160,412
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Direct labor costs
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134,980
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113,348
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of $1,700 per month)
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55,534
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53,124
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Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yeaman has cash payments for selling and administrative expenses including salaries of $40,000 per month plus commissions that are 11% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,000.
Begin by preparing the
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Yeaman Company
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Cash Budget
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Two Months Ended January 31 and February 28
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January
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Beginning cash balance
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Cash receipts
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Cash available
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Cash payments:
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Purchases of direct materials
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Direct labor
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Manufacturing overhead
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Selling and administrative expenses
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Total cash payments
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Ending cash balance before financing
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Minimum cash balance desired
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Projected cash excess (deficiency)
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Financing:
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Borrowing
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Principal repayments
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Total effects of financing
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Ending cash balance
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