Personal Budget

At the beginning of the school year, Craig Kovar decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

Line Item Description	Amount
Cash balance, September 1 (from a summer job)	$10,400
Purchase season football tickets in September	160
Additional entertainment for each month	250
Pay fall semester tuition in September	5,400
Pay rent at the beginning of each month	600
Pay for food each month	550
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,200

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.

Line Item Description	September	October	November	December
Estimated cash receipts from:
Additional entertainmentFoodPart-time jobRentTuition	$fill in the blank 3	$fill in the blank 4	$fill in the blank 5	$fill in the blank 6
Additional entertainmentDepositFoodRentTuition				fill in the blank 8
Total cash receipts	$fill in the blank 9	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12
Less estimated cash payments for:
CashInsuranceMovie ticketsPart-time jobSeason football tickets	$fill in the blank 14
Additional entertainmentCashInsuranceMovie ticketsPart-time job	fill in the blank 16	$fill in the blank 17	$fill in the blank 18	$fill in the blank 19
CashInsuranceMovie ticketsPart-time jobTuition	fill in the blank 21
CashInsuranceMovie ticketsPart-time jobRent	fill in the blank 23	fill in the blank 24	fill in the blank 25	fill in the blank 26
CashFoodInsuranceMovie ticketsPart-time job	fill in the blank 28	fill in the blank 29	fill in the blank 30	fill in the blank 31
DepositInsuranceMovie ticketsPart-time jobPrepaid rent	fill in the blank 33
Total cash payments	$fill in the blank 34	$fill in the blank 35	$fill in the blank 36	$fill in the blank 37
Cash increase (decrease)	$fill in the blank 38	$fill in the blank 39	$fill in the blank 40	$fill in the blank 41
Less cash balance at beginning of monthPlus cash balance at beginning of month	fill in the blank 43	fill in the blank 44	fill in the blank 45	fill in the blank 46
Cash balance at end of month	$fill in the blank 47	$fill in the blank 48	$fill in the blank 49	$fill in the blank 50

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

StaticFlexible

c. What are the budget implications for Craig Kovar?

Craig can see that his present plan fill in the blank 1 of 1

will providewill not provide

sufficient cash. If Craig did not budget but went ahead with the original plan, he would be fill in the blank 2 of 3$ fill in the blank 3 of 3

overshort

at the end of December, with no time left to adjust.

PART 2

Tobins Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for November:

Line Item Description	Units 12" Pizza	Units 16" Pizza
Budgeted production volume	65,000	45,000

There are three direct materials used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

Line Item Description	12" Pizza	16" Pizza
Direct materials:
Dough	0.55 lb. per unit	0.80 lb. per unit
Tomato	0.25	0.40
Cheese	0.70	1.20

In addition, Tobin's has determined the following information about each material:

Line Item Description	Dough	Tomato	Cheese
Estimated inventory, November 1	2,600 lbs.	1,200 lbs.	3,200 lbs.
Desired inventory, November 30	1,900 lbs.	1,500 lbs.	2,900 lbs.
Price per pound	$0.40	$0.50	$0.75

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

Prepare November's direct materials purchases budget for Tobins Frozen Pizza Inc. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Round your final answers to the nearest dollar.

Line Item Description	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza	fill in the blank 2	fill in the blank 3	fill in the blank 4
16" pizza	fill in the blank 5	fill in the blank 6	fill in the blank 7
Desired inventory, November 1Desired inventory, November 30Estimated inventory, November 1Estimated inventory, November 30Supervisor salaries	fill in the blank 9	fill in the blank 10	fill in the blank 11
Total units available	fill in the blank 12	fill in the blank 13	fill in the blank 14
Desired inventory, November 1Desired inventory, November 30Estimated inventory, November 1Estimated inventory, November 30Supervisor salaries	fill in the blank 16	fill in the blank 17	fill in the blank 18
Total units to be purchased	fill in the blank 19	fill in the blank 20	fill in the blank 21
Unit price	$fill in the blank 22	$fill in the blank 23	$fill in the blank 24
Total direct materials to be purchased	$fill in the blank 25	$fill in the blank 26	$fill in the blank 27	$fill in the blank 28

PART 3

Schedule of cash collections of accounts receivable

Pampered Pal Inc., a pet supplies distributor, was organized on January 1. Projected sales for each of the first three months of operations are as follows:

Month	Amount
January	$400,000
February	600,000
March	850,000

All sales are on account. Collections are expected as follows: 75% of sales are expected to be collected in the month of the sale, 15% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for January, February, and March. Enter all amounts as positive numbers.

Line Item Description	January	February	March
January sales on account:
Collected in January	$Collected in January
Collected in February		$Collected in February
Collected in March			$Collected in March
February sales on account:
Collected in February		Collected in February
Collected in March			Collected in March
March sales on account:
Collected in March			Collected in March
Total cash collected	$Total cash collected	$Total cash collected	$Total cash collected