Question
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 98,000 July $ 43,000 February 91,000 August 43,000 March 23,000 September 53,000
Bombs Away Video Games Corporation has forecasted the following monthly sales: |
January | $ | 98,000 | July | $ | 43,000 |
February | 91,000 | August | 43,000 | ||
March | 23,000 | September | 53,000 | ||
April | 23,000 | October | 83,000 | ||
May | 18,000 | November | 103,000 | ||
June | 33,000 | December | 121,000 | ||
Total annual sales = $732,000 |
Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12. |
Of each month's sales, 40 percent are for cash and 60 percent are on account. All accounts receivable are collected in the month after the sale is made. |
a. | Construct a monthly production and inventory schedule in units. Beginning inventory in January is 23,000 units. |
Bombs Away Video Games Corporation | |||||||
Production and inventory schedule in units | |||||||
Beginning inventory | + | Production | Sales | = | Ending inventory | ||
January | 23,000 | ||||||
February | |||||||
March | |||||||
April | |||||||
May | |||||||
June | |||||||
July | |||||||
August | |||||||
September | |||||||
October | |||||||
November | |||||||
December |
b. | Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000. |
Bombs Away Video Games Corporation | |||||||||||
Cash Receipts Schedule | |||||||||||
January | February | March | April | May | June | ||||||
Sales | $ | $ | $ | $ | $ | $ | |||||
Cash receipts: | |||||||||||
Cash sales | $ | $ | $ | $ | $ | $ | |||||
Prior month's credit sales | |||||||||||
Total cash receipts | $ | $ | $ | $ | $ | $ | |||||
Bombs Away Video Games Corporation | |||||||||||
Cash Receipts Schedule | |||||||||||
July | August | September | October | November | December | ||||||
Sales | $ | $ | $ | $ | $ | $ | |||||
Cash receipts: | |||||||||||
Cash sales | $ | $ | $ | $ | $ | $ | |||||
Prior month's credit sales | |||||||||||
Total cash receipts | $ | $ | $ | $ | $ | $ | |||||
c. | Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $43,000 per month. |
Bombs Away Video Games Corporation | |||||||||||
Cash Payments Schedule | |||||||||||
Constant production | |||||||||||
January | February | March | April | May | June | ||||||
Production cost | $ | $ | $ | $ | $ | $ | |||||
Other cash payments | |||||||||||
Total cash payments | $ | $ | $ | $ | $ | $ | |||||
Bombs Away Video Games Corporation | |||||||||||
Cash Payments Schedule | |||||||||||
Constant production | |||||||||||
July | August | September | October | November | December | ||||||
Production cost | $ | $ | $ | $ | $ | $ | |||||
Other cash payments | |||||||||||
Total cash payments | $ | $ | $ | $ | $ | $ | |||||
d. | Prepare a monthly cash budget for January through December using the cash receipts schedule from partband the cash payments schedule from partc. The beginning cash balance is $5,000, which is also the minimum desired.(Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.) |
Bombs Away Video Games Corporation | |||||||||||
Cash Budget | |||||||||||
January | February | March | April | May | June | ||||||
Beginning cash | $ | $ | $ | $ | $ | $ | |||||
Net cash flow | |||||||||||
Cumulative cash balance | $ | $ | $ | $ | $ | $ | |||||
Monthly loan or (repayment) | |||||||||||
Ending cash balance | $ | $ | $ | $ | $ | $ | |||||
Cumulative loan balance | $ | $ | $ | $ | $ | $ | |||||
Bombs Away Video Games Corporation | |||||||||||
Cash Budget | |||||||||||
July | August | September | October | November | December | ||||||
Beginning cash | $ | $ | $ | $ | $ | $ | |||||
Net cash flow | |||||||||||
Cumulative cash balance | $ | $ | $ | $ | $ | $ | |||||
Monthly loan or (repayment) | |||||||||||
Ending cash balance | $ | $ | $ | $ | $ | $ | |||||
Cumulative loan balance | $ | $ | $ | $ | $ | $ | |||||
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