Bombs Away Video Games sells the popular Strafe and Capture video game. It sells
ID: 2733125 • Letter: B
Question
Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.
Of each month's sales, 30 percent are for cash and 70 percent are on account. All accounts receivable are collected in the month after the sale is made.
Construct a monthly production and inventory schedule in units. Beginning inventory in January is 31,000 units.
Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.
Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $51,000 per month.
Prepare a monthly cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $5,000, which is also the minimum desired. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.)
Bombs Away Video Games Corporation has forecasted the following monthly sales:
Explanation / Answer
a)Production and inventory schedule in units:
b) Cash Receipts schedule:
c) Cash Payment Schedule:
d) Cash Budget:
Bombs Away Video Games Corporation Production and inventory schedule in units Beginning + Production – Sales = Ending inventory inventory January 31,000 69,000 1,06,000 -6,000 February -6,000 69,000 99,000 -36,000 March -36,000 69,000 31,000 2,000 April 2,000 69,000 31,000 40,000 May 40,000 69,000 26,000 83,000 June 83,000 69,000 41,000 1,11,000 July 1,11,000 69,000 51,000 1,29,000 August 1,29,000 69,000 51,000 1,47,000 September 1,47,000 69,000 61,000 1,55,000 October 1,55,000 69,000 91,000 1,33,000 November 1,33,000 69,000 1,11,000 91,000 December 91,000 69,000 1,29,000 31,000