Question
Sweet Cupcake (SC) Luis and Jose have set up a partnership, baking and selling cupcakes directly to consumers and supermarkets. They called the business Sweet
Sweet Cupcake (SC)
Luis and Jose have set up a partnership, baking and selling cupcakes directly to consumers and supermarkets. They called the business Sweet Cupcake (SC). They used their savings of $2000 as starting capital. The partners need an overdraft agreement from the local bank. The bank manager asked for a cash-flow forecast.
Luis has forecasted the following sales and cost figures for the first six months of operation, beginning in January.
Sales
- Average selling price of one cupcake: $6.
- Sales of cupcakes: 1300 cupcakes in January and 1700 cupcakes per month from February.
- 70 % of customers who purchase cupcakes will pay in cash. The supermarkets will buy the remaining 30 % of cupcakes on credit and pay one month later.
Costs
- Rent: $5500, payable at the start of each quarter.
- Labour costs: $750 per month.
- Raw materials: 50 % of sales revenue per month, paid in cash.
- Overheads: $400 per month, paid in cash.
Questions:
(a) Prepare a monthly cash-flow forecast for SC for the first six months of operation.
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