Brief Exercise 10-21 [LO 10-4] The George Company has a policy of maintaining an end-of-month cash balance of at least $32,000. In months where a shortfall is expected, the company can draw in $1,000 increments on a line of credit it has with a local bank, at an interest rate of 12% per annum. All borrowings are assumed for budgeting purposes to occur at the beginning of the month, while all loan repayments (in $1,000 increments of principal) are assumed to occur at the end of the month. Interest is paid at the end of each month. For April, an end-of- month cash balance (prior to any financing and interest expense) of $17,000 is budgeted; for May, an excess of cash collected over cash payments (prior to any interest payments and loan repayments) of $21,000 is anticipated. a. What is the interest payment estimated for April (there is no bank loan outstanding at the end of March)? (Do not round intermediate calculations.) b. What is the total financing effect (cash interest plus loan transaction) for May? (Do not round intermediate calculations.) Estimated interest payment Total financing effect b. Brief Exercise 10-17 [LO 10-4] Grey Manufacturing Company expects sales to total 20,000 units in the first quarter, 17,000 units in the second quarter, and 25,000 units in the third quarter of the current fiscal year. Company policy is to have on hand at the end of each quarter an amount of inventory equal to 10% of the following quarter's sales. Given this information, how many units should be scheduled for production in the second quarter? Scheduled production units Brief Exercise 10-18 (LO 10-6, 10-7] Easy Clean operates a chain of dry cleaners. It is experimenting with the use of a continuous improvement (.e., kaizen) budget for operating expenses. Currently, a typical location has operating expenses of $30,000 per month. Plans are in place to achieve labor and utility savings. The associated operational changes are estimated to reduce monthly operating expenses by a factor of 0.99 beginning in January. What is the estimated operating expenses for January? For June? For December? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) January June December Estimated operating costs Brief Exercise 10-21 [LO 10-4] The George Company has a policy of maintaining an end-of-month cash balance of at least $32,000. In months where a shortfall is expected, the company can draw in $1,000 increments on a line of credit it has with a local bank, at an interest rate of 12% per annum. All borrowings are assumed for budgeting purposes to occur at the beginning of the month, while all loan repayments (in $1,000 increments of principal) are assumed to occur at the end of the month. Interest is paid at the end of each month. For April, an end-of- month cash balance (prior to any financing and interest expense) of $17,000 is budgeted; for May, an excess of cash collected over cash payments (prior to any interest payments and loan repayments) of $21,000 is anticipated. a. What is the interest payment estimated for April (there is no bank loan outstanding at the end of March)? (Do not round intermediate calculations.) b. What is the total financing effect (cash interest plus loan transaction) for May? (Do not round intermediate calculations.) Estimated interest payment Total financing effect b. Brief Exercise 10-17 [LO 10-4] Grey Manufacturing Company expects sales to total 20,000 units in the first quarter, 17,000 units in the second quarter, and 25,000 units in the third quarter of the current fiscal year. Company policy is to have on hand at the end of each quarter an amount of inventory equal to 10% of the following quarter's sales. Given this information, how many units should be scheduled for production in the second quarter? Scheduled production units Brief Exercise 10-18 (LO 10-6, 10-7] Easy Clean operates a chain of dry cleaners. It is experimenting with the use of a continuous improvement (.e., kaizen) budget for operating expenses. Currently, a typical location has operating expenses of $30,000 per month. Plans are in place to achieve labor and utility savings. The associated operational changes are estimated to reduce monthly operating expenses by a factor of 0.99 beginning in January. What is the estimated operating expenses for January? For June? For December? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) January June December Estimated operating costs
