Exercise 7-17 Preparation of cash budgets (for three periods) LO P2

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year.

	Cash Receipts			Cash payments
January	$	519,000		$	460,300
February		404,500			345,800
March		455,000			522,000

According to a credit agreement with the companys bank, Kayak promises to have a minimum cash balance of $50,000 at each month-end. In return, the bank has agreed that the company can borrow up to $150,000 at a monthly interest rate of 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company repays loan principal with any cash in excess of $50,000 on the last day of each month. The company has a cash balance of $50,000 and a loan balance of $100,000 at January 1.

Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)

Exercise 8-2 Preparing flexible budgets LO P1

Tempo Company's fixed budget (based on sales of 18,000 units) for the first quarter of calendar year 2017 reveals the following.

	Fixed Budget
Sales (18,000 units)						$	3,744,000
Cost of goods sold
Direct materials		$	414,000
Direct labor			774,000
Production supplies			486,000
Plant manager salary			214,000				1,888,000
Gross profit							1,856,000
Selling expenses
Sales commissions			126,000
Packaging			252,000
Advertising			100,000				478,000
Administrative expenses
Administrative salaries			264,000
Depreciationoffice equip.			234,000
Insurance			204,000
Office rent			214,000				916,000
Income from operations						$	462,000

Complete the following flexible budgets for sales volumes of 16,000, 18,000, and 20,000 units. (Round cost per unit to 2 decimal places.)