Management Accounting

Question 3

A company has a cash balance of $75,000 at the beginning of March and having regard to the following information.

Creditors give 1 month credit

Salaries are paid in the current month

Fixed overheads are paid one month in arrears and include a charge for depreciation of $5,000 per month

Variable overheads are paid two months in arrears

Credit sales are settled as follows: 40% in the month of sale, 45% in the next month and 12% in the following month. The balance represents bad debts.

Month	Cash Saales	Credit Sales	Purchases
	$
January		74,000	55,200
February		82,000	61,200
March	20,000	80,000	60,000
April	22,000	90,000	69,000
May	25,000	100,00	75,000
	Salaries	Fixed Overheads	Variable Overhead
	$
January	9,000	30,000	45,000
February	9,000	30,000	50,000
March	9,500	30,000	55,000
April	9,500	32,000	60,000
May	10,000	32,000	70,000

Required: Prepare the Cash Budget for March, April and May.