Cash budget

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1 Tastee Co is a small private company, which provides residential cookery courses to individuals. The company is currently collating information for its budget for the six months ending 31 December 2010. The following information is available: (i) Provisional bookings for courses Jul Aug Sep Oct Nov Dec Number of courses 0 2 4 4 4 Average number of attendees per course 16 8 16 00 4 12 No courses are run during the month of July. Tastee Co requires customers to confirm their attendance in the week prior to the course, giving their credit card number as a guarantee. On average, 75% of provisional bookings are confirmed and therefore result in fee payment. (ii) Course prices Each course lasts for three days, running from Friday to Sunday, and the fee for each course is $1,200 per attendee. All courses have to be paid for in full on the first day of the course. Any returning customers are given a 25% discount on the fee. One in three of confirmed bookings is from a returning customer. (iii) Personnel costs Tastee Co's courses are delivered by experienced chef, Oliver James. He is not a member of staff at Tastee Co, but rather an outside contractor. Oliver James charges Tastee Co $3,000 for each course and is supported by his assistant, Mark White. Oliver James pays his assistant a wage of $500 per course. Tastee Co has several part-time support staff. Wages costs for July are only $1,000 per month, but every month thereafter they amount to $4,000. However, the company is planning to increase pay by 5%, from September. All staff are paid at the end of each month for that month's work. (iv) Property costs The business property comprises a small hotel, which includes an office and large kitchen. Tastee Co rents the hotel at a rental cost of $24,000 per annum, with rents being paid quarterly in advance on 31 March, 30 June, 30 September and 31 December. However, the company has just received a notice from the landlord of the hotel, informing them that, with effect from 31 December 2010, annual rental payments will increase by 5%. (v) Food costs All food purchased by the hotel is organic and delivered weekly by Farm Fresh, a local firm. On the 5th day of each month, Tastee Co pays the bill for the previous month's food deliveries. However, in December, Tastee Co is also required to settle its bill for December's food requirements due to the two-week holiday taken by Farm Fresh in January. Over recent months, the cost for food on each residential course (including ingredients used for cooking) has been $50 per attendee. However, due to lower availability of organic produce, inflation of 2% per month is expected to occur from September onwards. Food costs for June 2010 are expected to be $1,100 in total. (vi) General Overheads Tastee Co's business rates are $8,350 per annum, paid in ten equal instalments from April to January each year. The company's fuel cost of $4,200 per annum is paid for by equal monthly direct debits. However, it has just come to the fuel supplier's attention that the direct debit failed to leave Tastee Co's bank accounts in the months of owed for these months too. (viii) Bank account (vii) Capital expenditure Required: January to April inclusive, due to a bank error. Therefore, the direct debit payment for July will include the amounts The balance on the company's bank account is expected to be zero on 30 June 2010; it currently has a sufficient Tastee Co to pay for the ovens in two instalments - one in August and one in October. Managing Director is confident that he can obtain a 10% discount on this price. The supplier is also allowing Prepare a cash budget for each of the six months in the period ending 31 December 2010. Tastee Co needs to replace its three oven's in August. The list price of these is $1,800 each but Tastee Co's overdraft facility to cover any cash deficit arising. Note: All workings should be rounded to the nearest $