Ivanhoe Company expects to have a cash balance of $45,200 on January 1, 2022. Ivanhoe has budgeted the following for the first two months of the year 2022: 1. Collections from customers: January $90,900; February $108,900. Payments to suppliers: January $39,600; February $50,500. Direct labour: January $29,800; February $35,000. Wages are paid in the month they are incurred. 4. Manufacturing overhead: January $24,900; February $30,300. Overhead costs are paid as incurred. Selling and administrative expenses: January $16,100; February $22,100. These costs do not include depreciation and they are paid as incurred. 2. 3. 5. 6. Sales of investments in January are expected to realize $9,900 in cash. Ivanhoe Company wants to keep a minimum monthly cash balance of $20,000. Ignore any interest on amounts borrowed.
Ivanhoe Company expects to have a cash balance of $45,200 on January 1, 2022. Ivanhoe has budgeted the following for the first two months of the year 2022: 1. Collections from customers: January $90,900; February $108,900. Payments to suppliers: January $39,600; February $50,500. Direct labour: January $29,800; February $35,000. Wages are paid in the month they are incurred. 4. Manufacturing overhead: January $24,900; February $30,300. Overhead costs are paid as incurred. Selling and administrative expenses: January $16,100; February $22,100. These costs do not include depreciation and they are paid as incurred. 2. 3. 5. 6. Sales of investments in January are expected to realize $9,900 in cash. Ivanhoe Company wants to keep a minimum monthly cash balance of $20,000. Ignore any interest on amounts borrowed.
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:Ivanhoe Company expects to have a cash balance of $45,200 on January 1, 2022. Ivanhoe has budgeted the following for the first two
months of the year 2022:
1. Collections from customers: January $90,900; February $108,900.
Payments to suppliers: January $39,600; February $50,500.
Direct labour: January $29,800; February $35,000. Wages are paid in the month they are incurred.
4. Manufacturing overhead: January $24,900; February $30,300. Overhead costs are paid as incurred.
Selling and administrative expenses: January $16,100; February $22,100. These costs do not include depreciation and they
are paid as incurred.
2.
3.
5.
6.
Sales of investments in January are expected to realize $9,900 in cash. Ivanhoe Company wants to keep a minimum
monthly cash balance of $20,000. Ignore any interest on amounts borrowed.
Prepare a cash budget for January and February.
IVANHOE COMPANY
Cash Budget
For 2022
$
January
$
February
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