1. Beta Services

Scenario: Cash Budget Preparation

Data:

• Expected Sales Revenue (Month 1): $200,000
• Variable Costs (Month 1): $80,000
• Fixed Costs (Month 1): $50,000
• Beginning Cash Balance: $30,000
• Cash Sales: 40% of total sales
• Credit Sales: 60% of total sales

Requirements:

1. Prepare Beta Services' cash budget for Month 1.
2. Calculate the expected cash collections from credit sales assuming 30-day and 60-day collection periods.
3. Determine the ending cash balance for Month 1.
4. Discuss the importance of cash budgeting for Beta Services' liquidity management.
5. Analyze the impact of a 10% decrease in sales on Beta Services' cash flow.
6. Recommend strategies to improve Beta Services' cash flow management.