MASTER BUDGET

A company started business on January 1, 2019. The company estimated that sales for the first six months would be as follows:

Month		Units		Dollars
January		12,000		$ 72,000
February		9,500		57,000
March		14,000		84,000
April		21,700		130,200
May		20,000		120,000
June		32,100		192,600

The company sells all items on account and expects collections of accounts receivable to be as follows: 80% in the month of the sale, and the remaining 20% in the month after the sale.

Required:

1. Compute the expected cash collections during the months of January, February, March, April, May and June.
2. The company has decided that finished goods inventory at the end of each month should ideally be equal to 70% of next months sales. What should budgeted production be for each month?
3. It takes two pounds of raw material to make one unit of finished product. The company wants to keep an ending inventory of raw material equal to 55% of next months production needs. How many pounds of raw material should be purchased in each month?
4. The raw material costs $1.75 per pound. The company pays for 85% of its purchases during the month of purchase and the remainder in the following month. How much cash will be disbursed during each month for the purchase of raw material?
5. The projected cash balance on March 1 is $19,500. What is the estimated cash balance at the end of March? (Prepare a formal cash budget for the month of March.)

*All questions should be answered in EXCEL