Refer to the information in PB9-1. Flying High Company had \($12,200\) cash on hand at April 1. Of its sales, 80 percent is cash. Of the credit sales, 60 percent is collected during the month of the sale and 40 percent is collected during the month following the sale.

Of raw material purchases, 70 percent is paid for during the month purchased, and 30 percent is paid in the following month. Raw materials purchases for March totaled \($800\). All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes \($280\) in depreciation.

Required:

Prepare the following for quarter 2:

1. Budgeted cash receipts. Include each month (April-June) as well as quarter 2 totals.

2. Budgeted cash payments.

3. Cash budget.

Data from PB9-1

Flying High Company manufactures kites that sell for \($15.00\) each. Each kite requires 2 yards of lightweight canvas, which costs \($0.50\) per yard. Each kite takes approximately 45 minutes to build, and the labor rate averages \($8.00\) per hour.

Flying High has the following inventory policies:

Ending finished goods inventory should be 30 percent of next month’s sales.

Ending raw materials inventory should be 20 percent of next month’s production.

Expected kite sales for the upcoming months are:

Variable manufacturing overhead is incurred at a rate of \($0.30\) per unit produced. Annual fixed manufacturing overhead is estimated to be \($9,000\) (\($750\) per month) for an expected production of 9,000 units for the year. Selling and administrative expenses are estimated at \($820\) per month plus \($0.75\) per unit sold.

Transcribed Image Text:

March April May June July 850 700 650 720 830 August 760