Can someone confirm the Cash Budget for me Additional information: -Cash balance
ID: 2533321 • Letter: C
Question
Can someone confirm the Cash Budget for me
Additional information:
-Cash balance on January 1 next year is estimated to be $900,000.
-Direct materials are paid for in the year they are ordered.
-Total factory overhead (variable and fixed combined) is estimated to be $896,500 and includes $100,000 of depreciation. Use this information when preparing the cash budget.
-Factory overhead costs are paid in the year incurred.
-All sales are for cash.
-Marketing and administrative expenses are estimated at 10% of sales revenue for the period and are paid when incurred.
-Income taxes for the current year are estimated at $400,000 and will be paid next year.
My Solution:
Parameters DM Inv DM Inv Product 1 Product 2 DM Cost January 1 December 31 Estimated Units Sold Estimated Sales Price Estimated FG Invy January 1 Desired FG Invy December 31 Direct material A per unit (per lb.) Direct material B per unit (per lb.) Direct material C per unit (each) Estimated Direct Labor Hours/Unit Estimated Direct Labor Rate/Hour 80,000 160 30,000 35,000 50,000 200 10,000 12,000 4 2 0 2 $15 836,000 $530,000 3 5,000 40,000 35,000 8,000 20 Other estimated information: Cash Bal January 1 Total overhead Depreciation Mktg & Admin Exp. (% of sales) Income taxes 900,000 $796,500 $100,000 $2,280,000 (10% of Sales Revenue) $400,000 (Not Paid Until Next YearExplanation / Answer
The answer you are doing is somewhat wrong
Sale receipt = 22800000 because it is 10% of marketing and administrative exp.
Direct material cost =
(344000*8)+(175000*5)+(264000*8)+(161000*5)+(55000*3)
=6709000$
Direct Labour = (170000*15)+(156000*20)
= 5670000$
Total Cash disbursement = 6709000+5670000 = 12379000
Cash budget =
Receipt = 22800000
Less :Disbursement = 12379000
Change in Cash = 10421000
Cash bal.01/01/2018 = 900000
Cash bal. 12/31/2018 = 11321000