SMG Construction Services expects to generate net cash from operations during 2023

as follows:

January $ 750,000

February $ 315,000

March $( 95,000)

April $(255,000)

May $( 75,000)

June $ 385,000

July $ 415,000

August $ 550,000

September $ 495,000

October $ 395,000

November $ 295,000

December $ 410,000

General overhead salaries are $175,000 per month. The burden rate for salary payroll is

25%. The company hired a second estimator in June at an annual salary of $70,000. He

started work July 1st.

Depreciation not otherwise charged to job cost is $18,000 per year.

Property taxes are $20,000 per year; 65% of which are paid in August, and the balance is

paid in December.

Rent and utilities are $10,000 per month. The lease renews effective July 1st and is

subject to a 10% increase.

Other general overhead expenses are $50,000 and are paid in the month after they are

incurred.

The company has an existing term loan for equipment purchases. The monthly payment

for principal and interest is $3,500.

The company has a total available line of credit of $2,000,000. Interest is paid the first of

each month based on the prior months average outstanding loan balance at a 4% rate.

The outstanding balance as of January 1st of $500,000. The companys policy is to pay

back the loan each month to the greatest extent possible.

Company management has mandated that a minimum cash balance at the end of each

month of $200,000 be maintained. The cash balance as of January 1st is $225,000

Based on this information, please do the following:

1. Prepare a General Overhead Budget for TKK for 2023.

2. Prepare annual cash flow projections.

3. Comment on the companys cash needs.