Budget data items for Globe Corporation for a three-month period:

Sales were 815,000 in August and 854,900 in September. Material usages was 119,500 in August and 123,300 in September.All sales are on account and accounts receivable in historically collected 22% in the month of sale, 60% in the month following sales, and the remainder two months after the sale.Material are paid for 37% in the month used and 63% the following month.All other expenses are paid in the month incurred.The cash balance was $38,000 at the beginning of October, and management wants to determine if the company will have enough cash to pay a year-end bonus.

Create a three-month cash budget, including a schedule for cash collections and materials payments.

October November December

Cash collection:

August

September

October

November

December

Total cash collection

October November December

Material payments:

August

September

October

November

December

Total material payments

October November December

Cash budget:

Beginning cash

Cash collection

Cash available

Cash payment:

Material payments

Direct labor 88,000 89,000 85,800

Variable overhead 63,810 64,821 69,283

Fixed overhead 140,000 140,000 140,000

Selling and administrative 301,847 305,812 304,452

Fixed loan payments 137,00 137,000 137,000

Total payments

Ending cash

2. Olympic product Inc. manufactures and distributes barbecue grills.The company normally sells 2,100 of these grills each month for a price of $250 each.The material cost for a grill is $55 and the direct labor is $32. The variable overhead cost is $26 per grill, and the fixed over cost $50,000 per month. A contract manufacture has approached the company and offered to supply the grills ready to sell for $120 each. The company management believes that if it accepts this offer, Olympic Products will be able to lease unused factory space for $20,000 per month.

Perform a make-versus-buy analysis

Make Buy Change in income

Materials

Direct labor

variable overhead

Fixed overhead

Purchase cost

Lease revenue

Total cost

Make or Buy? Explain why

1. Budget data items for Globe Corporation for a three-month period: Sales Direct materials Direct labor Variable overhead Fixed overhead Selling and Administrative expenses Fixed loans October 895,000 125,200 88,000 63,810 140,000 301,847 137,000 November 887,000 126,100 89,000 64,821 140,000 305,812 137,000 December 882,000 128,000 85,800 69,283 140,000 304,452 137,000 Sales were 815,000 in August and 854,900 in September. Material usages was 119,500 in August and 123,300 in September. All sales are on account and accounts receivable in historically collected 22% in the month of sale, 60% in the month following sales, and the remainder two months after the sale. Material are paid for 37% in the month used and 63% the following month. All pother expenses are paid in the month incurred. The cash balance was $38,000 at the beginning of October, and management wants to determine if the company will have enough cash to pay a year-end bonus. Prepare a three-month cash budget, including a schedule for cash collections and materials payments. October November December Cash collection: August September October November December Total cash collection October November December Material payments: August September October November December Total material payments October Cash budget: Beginning cash Cash collection Cash available November December Cash payment: Material payments Direct labor Variable overhead Fixed overhead Selling and administrative Fixed loan payments Total payments Ending cash 88,000 63,810 140,000 301,847 137,00 89,000 64,821 140,000 305,812 137,000 85,800 69,283 140,000 304,452 137,000 2. Olympic product Inc. manufactures and distributes barbecue grills. The company normally sells 2,100 of these grills each month for a price of $250 each. The material cos for a grill is $55 and the direct labor is $32. The variable overhead cost is $26 per grill, and the fixed over cost $50,000 per month. A contract manufacture has approached the company and offered to supply the grills ready to sell for $120 each. The company management believes that if it accepts this offer, Olympic Products will be able to lease unused factory space for $20,000 per month. Perform a make-versus-buy analysis Make Materials Direct labor variable overhead Fixed overhead Purchase cost Lease revenue Total cost Make or Buy? Explain why Buy Change in income