Quarterly Cash Budget (SIA) As part of the company’s overall planning program, the controller of the So Good Blueberry Packing Co. Ltd. prepares a cash budget by quarters each year.

The company’s operations consist solely of processing and canning the yearly crop of blueberries. As this is a seasonal commodity, all manufacturing operations take place in the quarter of October through December. Sales are made throughout the year and the company’s fiscal year ends on June 30.
The sales forecast for the coming year indicates (all figures in thousands):
1st quarter (July-September 19_1) $ 780 2nd quarter (October-December 19_1) 1,500 3rd quarter (January-March 19 2) 780 4th quarter (April-June 19_2) 780 All sales are on account. The beginning balance of receivables is expected to be collected during the first quarter. It is anticipated that subsequent collections will follow the pattern of two-thirds collected in the quarter of sales, the remaining one-third in the quarter following.
Purchases of blueberries are scheduled as follows: $240,000 in the 1st quarter and $720,000 in the 2nd quarter. Payment is made in the quarter of purchase.
Direct labor of $700,000 is incurred and paid in the second quarter.
Factory overhead cost (paid in cash during quarter it is incurred) is $860,000 in the second quarter. The standby (fixed) amount in each of the other three quarters is $200,000.
Selling and administrative expenses, incurred and paid, amount to $100,000 per quarter during the year.
To finance its seasonal working-capital needs, the company has obtained a line of short-term credit with the Royal Toronto Bank. The company maintains a minimum cash balance of $8,000 and borrows and repays only in multiples of $5,000. It repays as soon as it is able without impairing the minimum cash balance. Interest is at 8 percent and is paid at time of loan repayment. It is assumed that all borrowing is made at the beginning of a quarter, and the repayments are made at the end of a quarter. (Round interest calculations to nearest $1,000.)
The company plans to spend the following amounts on fixed assets:
3rd quarter $150,000 4th quarter 50,000 Account balances as of July 1, 19_1 were:
Cash $ 8,000 Accounts receivable 25,000 Prepare a schedule to show the cash budget and financing requirements for each quarter and for the year ended June 30, 19_2.
_ Comment briefly on the nature and purpose of cash budgets for managerial planning.

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