Molly West is developing her retail firm's budget. She provides you with the following budgeted sales data (in units) for the first five months of the year:
.....................Sales in Units
January ....................6,400
February ..................5,800
March .....................6,000
April ......................6,100
May .......................5,600
Each unit sells for $50. Additionally, sales are billed on the last day of the month. For example, all customers making purchases from Molly during April will be sent a bill on April 30. Customers paying within 10 days of the billing date are granted a 4% discount. For example, if a customer purchases $100 worth of merchandise during
April and pays her bill by May 10, then she would pay $96. 60% of sales are collected within 10 days of the billing date (i.e., during the discount period), 25% within 11-30 days of the billing date, 10% within 31-60 days of the billing date, and 5% are never collected. There are no cash sales - all sales are on credit. (Please assume that each month has 30 days).
Molly pays for all of her inventory in cash during the month purchased. The number of units in each month's ending inventory equals 110% of the next month's sales in units. Each unit of merchandise inventory costs Molly $30 (i.e., Molly pays her supplier $30/unit). Selling costs, in total, equal 25% of the current month's gross (i.e., before any discounts) revenue, and $10,000 of the total selling costs represents monthly noncash depreciation. Finally, Molly pays 60% of her selling costs in cash during the same month, and the remaining 40% in the following month.
Required:
a. What are Molly's budgeted cash inflows for April?
b. What are Molly's budgeted cash outflows for April?