Homework Exercise 5

LandoManufacturingCompanypreparesmonthlycashbudgets.operatingbudgetsforJan.toMayare:

(Figin $'000)

Relevantdatafrom

	January	February	March	April	May
Sales	700	800	900	1000	1100
DirectMaterialspurchases	200	220	270	300	310
DirectLabour	100	110	140	180	220
ManufacturingOverhead	120	150	180	190	200
SellingandAdmoverhead	150	160	180	190	200

All sales are on account. Collectionsare expected to be 60% in the month of sales, 10%in the first month followingthe sale and 25% in the second month followingthe sale. 5%ofthesaleswillbecomebaddebtsasthebusinessdealswithhighriskcustomers.

Forty percent of direct material purchasesare paid incash after first month of purchaseand the balance due is paid in the second month following the purchase.All other itemsabove are paid in the month incurred.Manufacturing overheads include $ 20,000 asDepreciation on Machinery.Selling and Administration overheads include $ 10,000 asDepreciationon OfficeEquipment.

Credit sales:Nov.2004$500,000and Dec.2004$ 600,000Purchasesofdirectmaterials : Dec.2004:200,000

OtherreceiptsJan2005Interestreceivable:5,000

March.2005 Proceedsfromsaleofsecurities:$15,000May2005GovernmentGrants:$ 10,000

Otherdisbursements:February2005$20,000forland

March2005Taxpayable$30,000

The company cash balance on 1.1.2005 is expected to be $ 60,000 The company wantstomaintainaminimumcashbalanceof$50,000.

Required:

PrepareacashbudgetforJantoMay2005inacolumnarform.