Bombs Away Video Games Corporation has forecasted the following monthy sales: Ja
ID: 2648186 • Letter: B
Question
Bombs Away Video Games Corporation has forecasted the following monthy sales:
Jan. $95,000 July $40,000
Feb. 88,000 Aug. 40,000
Mar. 20,000 Sept. 50,000
April 20,000 Oct. 80,000
May 15,000 Nov. 100,000
June 30,000 Dec. 118,000
Total Sales = $696,000
Bombs Away Video Games sells the popular Strafe and Capture Video game cartridge. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month
Explanation / Answer
a. Production and inventory schedule in units. Beginning Inventory + Production - Sales = Ending Inventory Jan 20,000 11600 19000 12,600 Feb 12,600 11600 17600 6,600 Mar 6,600 11600 4000 14,200 April 14,200 11600 4000 21,800 May 21,800 11600 3000 30,400 June 30,400 11600 6000 36,000 July 36,000 11600 8000 39,600 Aug 39,600 11600 8000 43,200 Sept 43,200 11600 10000 44,800 Oct 44,800 11600 16000 40,400 Nov 40,400 11600 20000 32,000 Dec 32,000 11600 23600 20,000 Working Note Sales ($) Sales in Units= sales$/$5 Jan $95,000 19000 Feb $88,000 17600 Mar $20,000 4000 April $20,000 4000 May $15,000 3000 June $30,000 6000 July $40,000 8000 Aug $40,000 8000 Sept $50,000 10000 Oct $80,000 16000 Nov $100,000 20000 Dec $118,000 23600 Total Sales $696,000 Annual Sales units= Total sales/Sales Per Unit ; $696,000/$5= 139,200 units Annual production units =Annual sales unit/12 ; 139,200/12 = 11,600 units per month b. Dec Jan Feb Mar April May June July Aug Sept Oct Nov Dec Sales ($) $100,000.00 $95,000.00 $88,000.00 $20,000.00 $20,000.00 $15,000.00 $30,000.00 $40,000.00 $40,000.00 $50,000.00 $80,000.00 $100,000.00 $118,000.00 30% collected in month of sale $30,000.00 $28,500.00 $26,400.00 $6,000.00 $6,000.00 $4,500.00 $9,000.00 $12,000.00 $12,000.00 $15,000.00 $24,000.00 $30,000.00 $35,400.00 70% collected in the following month $70,000.00 $66,500.00 $61,600.00 $14,000.00 $14,000.00 $10,500.00 $21,000.00 $28,000.00 $28,000.00 $35,000.00 $56,000.00 $70,000.00 Total Cash receipts $98,500.00 $92,900.00 $67,600.00 $20,000.00 $18,500.00 $19,500.00 $33,000.00 $40,000.00 $43,000.00 $59,000.00 $86,000.00 $105,400.00 c. Jan Feb Mar April May June July Aug Sept Oct Nov Dec Production Cost = 11,600 x $2 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 $23,200.00 Other cost $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 Total cash Payments $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 $63,200.00 d. Cash Budget Jan Feb Mar April May June July Aug Sept Oct Nov Dec Cash Receipts $98,500.00 $92,900.00 $67,600.00 $20,000.00 $18,500.00 $19,500.00 $33,000.00 $40,000.00 $43,000.00 $59,000.00 $86,000.00 $105,400.00 Less: Cash Payments -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 -$63,200.00 Net Cash flow $35,300.00 $29,700.00 $4,400.00 -$43,200.00 -$44,700.00 -$43,700.00 -$30,200.00 -$23,200.00 -$20,200.00 -$4,200.00 $22,800.00 $42,200.00 Beginning Cash $5,000.00 $40,300.00 $70,000.00 $74,400.00 $31,200.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 Cumulative Cash Balance $40,300.00 $70,000.00 $74,400.00 $31,200.00 -$13,500.00 -$38,700.00 -$25,200.00 -$18,200.00 -$15,200.00 $800.00 $27,800.00 $47,200.00 Monthly loan or (repayment)= cumulative cash balance + ending cash bal $0.00 $0.00 $0.00 $0.00 $18,500.00 $43,700.00 $30,200.00 $23,200.00 $20,200.00 $4,200.00 -$22,800.00 -$42,200.00 Cumulative loan $0.00 $0.00 $0.00 $0.00 $18,500.00 $62,200.00 $92,400.00 $115,600.00 $135,800.00 $140,000.00 $117,200.00 $75,000.00 Ending Cash Balance $40,300.00 $70,000.00 $74,400.00 $31,200.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00