1. Cash budgeting and decision making
Blueline Printing's board of directors was presented with the following information about operations for an upcoming three-month period. The board desires to declare a dividend at the end of June, but still maintain cash on hand of $250,000. Blueline began April with $75,000 of cash on hand. Prepare a cash budget, and determine how much cash will be available for the dividend. Is there any apparent risk associated with the dividend plan?
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April
|
May
|
June
|
|
Customer receipts
|
$700,000
|
$750,000
|
$800,000
|
|
Cash paid for direct materials
|
200,000
|
222,000
|
265,000
|
|
Cash paid for direct labor
|
245,000
|
265,000
|
300,000
|
|
Factory overhead*
|
140,000
|
145,000
|
154,000
|
|
SG&A**
|
86,000
|
89,000
|
83,000
|
|
Taxes
|
15,000
|
18,000
|
16,000
|
|
Equipment purchase***
|
500,000
|
* Includes monthly depreciation of $100,000
** Includes monthly depreciation of $25,000
*** Equipment purchase to be paid for in July
2. Planning for production
Scalia Systems manufactures rugged handheld computers for use in adverse working environments. Scalia tries to maintain inventory at 40% of the following month's expected unit sales.
Scalia began the year with 8,000 units in stock, based on the following unit sales projections prepared by the sales manager:
January 20,000
February 25,000
March 18,000
April 22,000
Prepare a schedule of planned unit production for January through March.