Problem 4 Cash Payments Clinton Summerhayes is CFO for a newly formed golf club manufacturing company. Below is the anticipated monthly production for the first year of operation, and beyond. Clinton is interested in learning which of the first twelve months will require cash outlays of more than $20,000 toward the purchase of composite shafts Each unit requires 4 board feet of composite material at $16.55 per board foot. All composite material is purchased in the month prior to its expected use. Composite shaft purchases are paid for 20% in the month of purchase, 70% in the month following the month of purchase and 10% in the second month following the month of purchase. Mersary Phy 195 April May pe 0:30 Which months will require cash outlays in excess of the S20,000 amount? Does the production in any given month necessarily correspond to the cash flow for that same month? What are the business implications of your observation? WORKSHEET 4 Anticipated cash payment TC Much Me Il Rug M March April Stay A Dec Juary Problem 4 Cash Payments Clinton Summerhayes is CFO for a newly formed golf club manufacturing company. Below is the anticipated monthly production for the first year of operation, and beyond. Clinton is interested in learning which of the first twelve months will require cash outlays of more than $20,000 toward the purchase of composite shafts. Each unit requires 4 board feet of composite material at $16.55 per board foot. All composite material is purchased in the month prior to its expected use. Composite shaft purchases are paid for 20% in the month of purchase, 70% in the month following the month of purchase, and 10% in the second month following the month of purchase. Month Units January 0 February 400 March 200 April 375 May 520 June 220 July 400 August 350 September 320 October 220 November 160 December 300 January 240 Which months will require cash outlays in excess of the $20,000 amount? Does the production in any given month necessarily correspond to the cash flow for that same month? What are the business implications of your observation? May 520 330 July 400 350 August September 20 October November 160 December 300 January 240 Which months will require cash outlays in excess of the $20,000 amount? Does the production in any given month necessarily correspond to the cash flow for that same month? What are the business implications of your observation? WORKSHEET 4 Anticipated cash payments Pur cha Total Cost Total Board Feet Paid Paid in Paldin Month Month Relatin Relating to Two Prior Months Units Composite Total Act Moth ($15.70 per Month 19%) January February March April May June July August September Our November December January