Cash Budget

Khloe Company imports gift items from overseas and sells them to gift shops and department stores throughout the United States. Khloe Company provided the following information:

1. The October 31 balance in the cash account is $53,915.
2. All sales are on account. Sales in September were $1,020,000 and in October were $1,280,000.
3. November sales are expected to be $2,175,000.
4. In Khloes experience, 70 percent of sales are collected in the month of sale and 28 percent are collected in the month following sale. The remaining credit sales are uncollectible.
5. Khloe purchases all merchandise on account. Purchases in September were $740,000 and in October were $950,000. November purchases are expected to be $2,030,000 as Khloe prepares for the Christmas buying season. Fifteen percent of purchases are paid in the month of purchase, while the remainder is paid in the month following the purchase month.
6. Khloe Company has nine employees who are paid a total of $45,000 per month. Due to timing issues, about 90 percent of total wages are paid in the month earned and the remaining 10 percent are paid in the following month.
7. Rent for office and warehouse space is $11,700 paid monthly in cash.
8. Utilities average $6,000 per month and are paid in cash.
9. In November, Khloe expects to pay employment taxes of $6,700.
10. Since Khloe imports product from overseas, customs duty and shipping to the central location of 10 percent of current monthly purchase cost must be paid in the month of purchase.
11. Other cash expenses for November are expected to be $40,500.

Required:

Prepare a cash budget for Khloe Company for the month of November.

Khloe Company
Cash Budget
For the Month of November
Beginning balance, cash account	$
Received on account from sales in:
October
November
Total cash available	$
Disbursements:
Payments for purchases made in:
October
November
Salaries paid for work in:
October
November
Rent
Utilities
Employment taxes
Customs duty and shipping
Other cash expenses
Total disbursements	$
Ending cash balance	$

Direct Labor Budget for Service

The School of Accounting (SOA) at State University is planning its annual fundraising campaign for accounting alumni. This year, the SOA is planning a call-a-thon and will ask Beta Alpha Psi members to volunteer to make phone calls to a list of 7,000 alumni. The Dean's office has agreed to let Beta Alpha Psi use their offices from 6 p.m. to 9 p.m. each weekday so that they will have access to phones. Each volunteer will be provided with a phone and a script with an introduction and suggested responses to various questions that had been asked in the past. Carol Johnson, Beta Alpha Psi faculty advisor, estimates the following:

1. Of the 7,000 phone numbers, roughly 10 percent will be wrong numbers (because alumni change addresses and phone numbers without updating State University). In that case, the student is instructed to apologize to the answering party, hang up, and move on to the next phone number. Each of these calls takes about three minutes.
2. Another 20 percent will be correct numbers, but no one is home and the answering machine picks up. In that case, the student is instructed to simply hang up and move on to the next phone number. Each of these calls takes about two minutes.
3. Each time an alumnus answers the phone, the student is instructed to introduce him or herself and read the scripted introduction. The student is encouraged to engage the alumnus in conversation and reminiscences about State U and bring the alum up to date on the wonderful things that are happening in the SOA. Some calls are longer, some shorter, but the average call length is 10 minutes.

Required:

1. Prepare a direct labor budget, in hours, for the fundraising call-a-thon. If 10 students volunteer, how many evenings will the phone-a-thon take? If required, round your answers to two decimal places.

The School of Accounting (SOA)
Direct Labor Budget In Hours
Minutes for wrong numbers
Minutes for answering machine calls
Minutes for alumni contact calls
Total minutes
60 minutes per hour
Total student hours
Number of students
Total hours per volunteer
3 hours per night
Total nights of calling