Front Page Video Games - Part Deux

Front Page Video Games loves the work you did for them on their Last Spike video game facility so now they want you to do an even more detailed analysis for a second manufacturing facility they are planning to run that will make a completely different game called First Spike.

They want you to develop forecasts for 2022 using the following information.

Forecast year	Month	Sales ($)	Other Cash Payments	Ending Cash	Ending Inventory Units	Units Produced
2021	November	$ 12,000				2,083
	December	24,000		$ 8,333	4,167	5,000
2022	January	240,000	$ 45,600
	February	150,000	52,800
	March	475,000	55,200
	April	264,000	48,000
	May	288,000	64,800
	June	240,000	62,400
	July	312,000	45,600
	August	264,000	48,000
	September	264,000	48,000
	October	336,000	50,400
	November	312,000	52,800
	December	264,000	48,000
2023	January	240,000	52,800

Sale price per unit is: $22 Cost per unit is: $11

Cash flows for unit costs in any month is the cost per unit times the units produced in the prior month because all unit costs are purchased on account (Accounts Payable) in the month produced and paid in full the following month. Similarly, Other Cash Payments in a month are payments regarding other expenses purchased on account in the prior month.

Front Page wants to keep its facility running with a level production policy, but they realize this might not be entirely realistic. To save capital investment they are purchasing used equipment that will require extensive repairs and maintenance twice a year. This means that in June and December they will only be able to produce a maximum number of units of 5000 Units.

First Spike sales are expected to be a mix of direct online cash sales and various distributors. The distributor's sales will all be on account. Cash receipts from distributor sales are expected to be received across the two months following the sale.

Front Page expects cash receipts to be approximately:

Cash sales	30%
A/R from 1 month prior	70%
A/R from 2 months prior	30%

1. Construct a monthly production and inventory schedule in units. (Note: To do part a, you should work in terms of units of production and units of sales.)
2. Prepare a monthly schedule of cash receipts.
3. Prepare a monthly schedule of cash payments.
4. Prepare a monthly cash budget.
5. Use this additional information to prepare the monthly balance sheet and determine the shareholder equity fluctuations for each month. Property, Plant & Equipment = $750,000 Bonds Payable (long term) = $450,000