Medio Company expects to have a cash balance of $700,000 on April 1, 2016. Relevant monthly budget data for quarter 2 of 2016 are as follows:

Collections from customers: April $1,150,000, May $1,050,000.

Payments for direct materials: April $505,000, May $430,000

Direct labor: April $470,000, May $435,000. Wages are paid in the month they are incurred.

Manufacturing overhead: April $383,000, May $325,000. These costs include depreciation of $15,000 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: April $265,000, May $241,000. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in April are expected to realize $160,000 in cash. Medio Company has a line of credit at the local bank that enables it to borrow up to $450,000. The company wants to maintain a minimum monthly cash balance of $300,000.

Instructions

Prepare a cash budget for April and May. How much is the cash excess/deficiency in April? How much is the cash excess/deficiency in May? What is the maximum amount the company can borrow during June?