Built-Tight is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for product costs for the quarter follow.**attached image chart-Budgeted Sales on July $64,000 / August $80,000 / September $48,000-Budgeted Cash Payments forDirect Materials on July $16,160 / August $13,440 / September $13,760Direct Labor on July $4,040 / August $3,360 / September $3,440Factory Overhead on July $20,200 / August $16,800 / September $17,200 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).Prepare a cash budget for each of the months of July, August, and September. (Round amounts to the dollar.) ## Financial Budgeting Breakdown for Q3This table illustrates the budgeted sales and cash payments over the months of July, August, and September. It provides a detailed comparison of the planned financial transactions for a business, helping to manage costs and allocate resources efficiently.### Budgeted Sales- **July:** $64,000- **August:** $80,000- **September:** $48,000### Budgeted Cash PaymentsBelow is the breakdown of budgeted cash payments for various categories:#### Direct Materials- **July:** $16,160- **August:** $13,440- **September:** $13,760#### Direct Labor- **July:** $4,040- **August:** $3,360- **September:** $3,440#### Factory Overhead- **July:** $20,200- **August:** $16,800- **September:** $17,200### Analysis- **Sales:** The budgeted sales peaked in August at $80,000 before decreasing to $48,000 in September.- **Direct Materials:** Payments for direct materials were highest in July at $16,160 and saw a slight decrease in August before increasing again in September.- **Direct Labor:** Budgeted cash payments for direct labor saw a reduction from July to August and then a slight increase in September.- **Factory Overhead:** Factory overhead costs followed a similar trend with the highest cost in July, dropping in August, and then rising slightly in September.This budget overview illustrates the expected cash flows, helping the business plan for upcoming expenses and adjust strategies as needed to maintain financial stability.

Budgeting - Budgeting is the process of estimating future operations based on past performance. %…

Built-Tight is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for product costs for the quarter follow. **attached image chart -Budgeted Sales on July $64,000 / August $80,000 / September $48,000 -Budgeted Cash Payments for Direct Materials on July $16,160 / August $13,440 / September $13,760 Direct Labor on July $4,040 / August $3,360 / September $3,440 Factory Overhead on July $20,200 / August $16,800 / September $17,200 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month). Prepare a cash budget for each of the months of July, August, and September. (Round amounts to the dollar.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Built-Tight is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for product costs for the quarter follow.

**attached image chart

-Budgeted Sales on July $64,000 / August $80,000 / September $48,000

-Budgeted Cash Payments for

Direct Materials on July $16,160 / August $13,440 / September $13,760

Direct Labor on July $4,040 / August $3,360 / September $3,440

Factory Overhead on July $20,200 / August $16,800 / September $17,200

Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).

Prepare a cash budget for each of the months of July, August, and September. (Round amounts to the dollar.)

## Financial Budgeting Breakdown for Q3

This table illustrates the budgeted sales and cash payments over the months of July, August, and September. It provides a detailed comparison of the planned financial transactions for a business, helping to manage costs and allocate resources efficiently.

### Budgeted Sales
- **July:** $64,000
- **August:** $80,000
- **September:** $48,000

### Budgeted Cash Payments
Below is the breakdown of budgeted cash payments for various categories:

#### Direct Materials
- **July:** $16,160
- **August:** $13,440
- **September:** $13,760

#### Direct Labor
- **July:** $4,040
- **August:** $3,360
- **September:** $3,440

#### Factory Overhead
- **July:** $20,200
- **August:** $16,800
- **September:** $17,200

### Analysis
- **Sales:** The budgeted sales peaked in August at $80,000 before decreasing to $48,000 in September.
- **Direct Materials:** Payments for direct materials were highest in July at $16,160 and saw a slight decrease in August before increasing again in September.
- **Direct Labor:** Budgeted cash payments for direct labor saw a reduction from July to August and then a slight increase in September.
- **Factory Overhead:** Factory overhead costs followed a similar trend with the highest cost in July, dropping in August, and then rising slightly in September.

This budget overview illustrates the expected cash flows, helping the business plan for upcoming expenses and adjust strategies as needed to maintain financial stability.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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