Crane Company expects to have a cash balance of $36,000 on January 1,2022. Relevant monthly budget data for the first 2 months of 2022 are as follows. Collections from customers: January $68,000, February $120,000. Payments for direct materials: January $40,000, February $60,000. Direct labor: January $24,000, February $36,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $16,800, February $20,000. These costs include depreciation of $1,200 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $12,000, February $16,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $9,600 in cash. Crane Company has a line of credit at a local bank that enables it to borrow up to $20,000. The company wants to maintain a minimum monthly cash balance of $16,000. Prepare a cash budget for January and February. Receipts Collections from Customers Ending Cash Balance Direct Materials Selling and Administrative Expenses Disbursements Manufacturing Overhead Borrowings Total Cash Available Total Disbursements Excess (Deficiency) of Available Cash Over Cash DIsbursements Sales Of Marketable Securities Direct Labor Total Receipts Repayments Beginning Cash Balance Financing
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Crane Company expects to have a cash balance of $36,000 on January 1,2022. Relevant monthly budget data for the first 2 months of 2022 are as follows.
Collections from customers: January $68,000, February $120,000.
Payments for direct materials: January $40,000, February $60,000.
Direct labor: January $24,000, February $36,000. Wages are paid in the month they are incurred.
Manufacturing
Selling and administrative expenses: January $12,000, February $16,000. These costs are exclusive of depreciation. They are paid as incurred.
Sales of marketable securities in January are expected to realize $9,600 in cash. Crane Company has a line of credit at a local bank that enables it to borrow up to $20,000. The company wants to maintain a minimum monthly cash balance of $16,000.
Prepare a
Receipts
Collections from Customers
Ending Cash Balance
Direct Materials
Selling and Administrative Expenses
Disbursements
Manufacturing Overhead
Borrowings
Total Cash Available
Total Disbursements
Excess (Deficiency) of Available Cash Over Cash DIsbursements
Sales Of Marketable Securities
Direct Labor
Total Receipts
Repayments
Beginning Cash Balance
Financing
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