12. Riverside Company has prepared the following budget for June:

Unit sales, selling price per unit, variable cost per unit, total fixed costs, and all inventories are anticipated to remain constant each month. Unit sales were 32,000 in May.
The cash balance at the beginning of June is $500,000. Riverside collects 80% of revenues in the month of sale and 20% in the following month. Materials costs are paid in the month following purchase, and all other costs are paid for as incurred. Riverside is hoping to reduce overhead costs in the future by 3% each month.

a. Prepare a cash budget for June.

b. Prepare a flexible budget for June for sales levels 10% and 20% above and below expectations.

c. Prepare a Kaizen budget for overhead for June through November.

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Sales revenue (for 27,000 units) Cost of goods sold Direct materials used $1,323,000 Direct labor 1,026,000 Variable factory overhead Fixed factory overhead 810,000 800,000 Gross margin Operating expenses Variable $ 918,000 Fixed Operating income $5,751,000 3,959,000 $1,792,000 850,000 1,768,000 $ 24,000