Datem Inc. is planning to request a line of credit from its bank. The bank requires them to submit a cash budget. Their Credit and Collection Department stillateu collections of sales as follows: collected within the month of sale, 20%; collected the month following the sale, 80% Payments for labor and raw materials are typically made during the month following the month in which these are incurred. The Production Department estimated total labor and raw material costs for each month as follows: (in P000) Aug Nov 980 480 The Marketing Department has drawn the following sales forecasts for parts of 1995 and 1996: (in P'000) May '95 June July Aug Sept Oct 1200 1,800 2.400 1.200 600 600 May 95 June 290 290 July 440 Sept 600 Oct 560 Dec 190 Nov Dec 1,200 300 Jan '96 150 Other projections include: general, selling and administrative expense will amount to approximately P112, 5000 a month; lease payments under long-term lease contracts will be P87,500 a month depreciation charges will P150,000 a month; miscellaneous expense will be P111,500 a month; income tax of P450,000 will be due in June, September and December, and a progress payment of P1,200,000 on a new database server must be paid in September. Cash on hand on June 30 will amount to P225,000, and a minimum cash balance of P210.000 must be maintained throughout the cash budget period. Cash at beginning of June is P676,500 How much cash can potentially be invested in November?
Datem Inc. is planning to request a line of credit from its bank. The bank requires them to submit a cash budget. Their Credit and Collection Department stillateu collections of sales as follows: collected within the month of sale, 20%; collected the month following the sale, 80% Payments for labor and raw materials are typically made during the month following the month in which these are incurred. The Production Department estimated total labor and raw material costs for each month as follows: (in P000) Aug Nov 980 480 The Marketing Department has drawn the following sales forecasts for parts of 1995 and 1996: (in P'000) May '95 June July Aug Sept Oct 1200 1,800 2.400 1.200 600 600 May 95 June 290 290 July 440 Sept 600 Oct 560 Dec 190 Nov Dec 1,200 300 Jan '96 150 Other projections include: general, selling and administrative expense will amount to approximately P112, 5000 a month; lease payments under long-term lease contracts will be P87,500 a month depreciation charges will P150,000 a month; miscellaneous expense will be P111,500 a month; income tax of P450,000 will be due in June, September and December, and a progress payment of P1,200,000 on a new database server must be paid in September. Cash on hand on June 30 will amount to P225,000, and a minimum cash balance of P210.000 must be maintained throughout the cash budget period. Cash at beginning of June is P676,500 How much cash can potentially be invested in November?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Datem Inc. is planning to request a line of credit from its bank. The bank requires them to submit a cash budget. Their Credit
and Collection Department estimated collections of sales as follows: collected within the month of sale, 20%; collected the
month following the sale, 80%. Payments for labor and raw materials are typically made during the month following the
month in which these are incurred. The Production Department estimated total labor and raw material costs for each month
as follows: (in P '000) May ¹95 290 June 290 July 440 June 600 Aug 980 Sept 600 Oct 560 Nov 480 Dec 190 The Marketing
Department has drawn the following sales forecasts for parts of 1995 and 1996: (in P'000) May '95 July Aug Sept Oct 1200
1,800 2,400 1,200 Nov Dec 1,200 300 Jan ¹96 150 600 Other projections include: general, selling and administrative expense
will amount to approximately P112, 5000 a month; lease payments under long-term lease contracts will be P87,500 a month;
depreciation charges will P150,000 a month; miscellaneous expense will be P111,500 a month; income tax of P450,000 will
be due in June, September and December, and a progress payment of P1,200,000 on a new database server must be paid in
September. Cash on hand on June 30 will amount to P225,000, and a minimum cash balance of P210,000 must be
maintained throughout the cash budget period. Cash at beginning of June is P676,500. How much cash can potentially be
invested in November?
Datem Inc. is planning to request a line of credit from its bank. The bank requires them to submit a cash budget. Their Credit and Collection Department estimateu
collections of sales as follows: collected within the month of sale, 20%; collected the month following the sale, 80%
Payments for labor and raw materials are typically made during the month following the month in which these are incurred. The Production Department estimated total
labor and raw material costs for each month as follows: (in P '000)
May ¹95 June
290
290
Dec
190
Aug
Sept Oct
Nov
440
980
600
560
480
The Marketing Department has drawn the following sales forecasts for parts of 1995 and 1996: (in P'000)
May 95 June
July
Sept Oct
Aug
1200 1.800 2.400 1.200
Nov Dec
1.200 300
Jan 96
150
600
600
Other projections include: general, selling and adininistrative expense will amount to approximately P112, 5000 a month; lease payments under long-term lease contracts
will be P87,500 a month; depreciation charges will P150,000 a month; miscellaneous expense will be P111,500 a month; income tax of P450,000 will be due in June,
September and December, and a progress payment of P1,200,000 on a new database server must be paid in September.
Cash on hand on June 30 will amount to P225.000, and a minimum cash balance of P210.000 must be maintained throughout the cash budget period: Cash at beginning of
June is P676,500
How much cash can potentially be invested in November?
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