Retail outlets purchase snowboards frorm The beginring cash batance for July 1, 2015, is anticipation of late summer and early fall purchases, outlets ramp up inventories from May $15,000. On October 1, 2014. Snowmass had a through August. Outlets are billed when boards are cash crunch and borrowed $70,000 on a 3% ordered. Invoices are payable within 60 days. From one-year note with interest payable monthly. The past experience, Snowmass' accountant projects note is due October 1, 2015 35% of invoices will be paid in the month invoiced, 40% will be paid in the following month, and 25% of invoices will be paid two months after the month of invoice. The average selling price per snowboard is $700. end More Info 8 To meet demand, Snowmass increases production from April through July because the snowboards are produced a month prior to their projected sale. Direct materials are purchased in the month of production and are paid for during the following month (terms are payment in full within 30 days of the invoice date). During this period there is no production for inventory and no materials are purchased for inventory 5 Direct manufacturing labor and manufacturing overhead are paid monthly. Variable manufacturing driven by the number of sales visits. However, there are no sales visits during the months studied. Snowmass, Inc., also incurs fixed manufacturing overhead costs of $4,000 per month and fixed nonmanufacturing overhead costs of $1,000 per month. 2 Data Table Projected Sales May 580 units June 620 units July 900 units August 600 units September 560 units October 540 units Direct Materials and Direct Manufacturing Labor Utilization and Cost Units per Board 10 Price per Unit Unit Wood Fiberglass Direct manufacturing labor 35 board feet 10 30 hour yard Requirements 1. Prepare a cash budget for the months of July through September 2015. Show supporting 2. Will Snowmass be in a position to pay off the $70,000 one-year note that is due on October 1, 3. Suppose Snowmass is interested in maintaining a minimum cash balance of $15,000. Will the schedules for the calculation of receivables and payables. 2015? If not, what actions would you recommend to Snowmass' management? company be able to maintain such a balance during all three months analyzed? If not, suggest a suitable cash management strategy Why do Snowmass' managers prepare a cash budget in addition to the revenues, expenses, and operating income budget? 4