Exercise 23-14

Danner Company expects to have a cash balance of $59,355 on January 1, 2017. Relevant monthly budget data for the first 2 months of 2017 are as follows.

Collections from customers: January $112,115, February $197,850.

Payments for direct materials: January $65,950, February $98,925.

Direct labor: January $39,570, February $59,355. Wages are paid in the month they are incurred.

Manufacturing overhead: January $27,699, February $32,975. These costs include depreciation of $1,978 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: January $19,785, February $26,380. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $15,828 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $32,975. The company wants to maintain a minimum monthly cash balance of $26,380. Prepare a cash budget for January and February.

DANNER COMPANY Cash Budget Februa anuary