Yogi has $14,000 in cash on hand on January 1 and has collected the following budget data: Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yogi has cash payments for selling and administrative expenses including salaries of $50,000 per month plus commissions that are 2% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yogi need to borrow cash by the end of February?
Yogi has $14,000 in cash on hand on January 1 and has collected the following budget data: Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yogi has cash payments for selling and administrative expenses including salaries of $50,000 per month plus commissions that are 2% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yogi need to borrow cash by the end of February?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Yogi has $14,000 in cash on hand on January 1 and has collected the following budget data:
Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yogi has cash payments for selling and administrative expenses including salaries of $50,000 per month plus commissions that are 2% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yogi need to borrow cash by the end of February?
Transcribed Image Text:Yogi has $14,000 in cash on hand on January 1 and has collected the following budget data:
E (Click on the icon to view the budget data.)
Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yogi has cash payments for selling and
administrative expenses including salaries of $50,000 per month plus commissions that are 2% of sales, all paid in the month of sale. The company requires a
minimum cash balance of $12,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yogi need to borrow cash by the end of
February?
Yogi Company
Cash Budget
Two Months Ended January 31 and February 28
January
Beginning cash balance
14000
442300
Cash receipts
Cash available
456300
Cash payments:
Purchases of direct materials
180624
Direct labor
135010
Manufacturing overhead
Selling and administrative expenses
- X
Data Table
January
February
Sales
$ 525,000 S 564,000
Cash receipts from customers
442,300
502,000
Cash payments for direct materials purchases
180,624
160,122
Direct labor costs
135,010
113,192
Manufacturing overhead costs (includes depreciation of
$1,400 per month)
55,714
53,654
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