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Cash Budgeting

Preparation of a cash budget

(Preparation of a cash budget) projected sales for the first eight months of 2010 as follows: January $100,000 April $300,000 July $200,000 February 120,000 May 275,000 August 180,000 March 150,000 June 200,000 collects 20 percent of its sales in the month of the sale, 50 percent in the month following the sale, and the r

Preparation of a Cash Budget Under Two Alternatives

Preparation of a Cash Budget Under Two Alternatives Each autumn, as a hobby, Suzanne De Angelo weaves cotton place mats to sell at local crafts shop. The mats sell for $ 20 per set of four. The shop charges a 10% commission and remits the net proceeds to De Angelo at the end of December. De Angelo has woven and

Budgets vs rolling forecasts, budget tools, inputs to master budgets

1. According to information posted by the Oregon Society of Certified Public Accountants, the current trend for businesses in relation to budgeting is changing a direction to "flexible budget tools." The information posted also indicates that "more companies are abandoning budgets in favor of rolling forecasts." In essence mos

CASH FLOW PLANNING IN BORDEAUX The year 2000 was considered the greatest year for wine in the Bordeaux region of France since at least 1982, and the winemakers could look forward to selling their wines for record prices, but there was one catch: these wines would not be released to consumers until late in 2003. The winemakers had incurred most of their costs in 2000 when the vines were being tended and the grapes were being processed into wine. In many industries this would mean the companies would have to finance their inventories for almost four years--not an insignificant cost. A company must finance its inventory by either borrowing the money, which results in out-of-pocket interest expense, or using its own funds. The second option generates an opportunity cost resulting from the interest revenue that could have been earned if these funds were not being used to finance the inventory. To address this potential cash flow problem, many of the winemakers in Bordeaux offer some of their wines for sale as futures. That means the wines are purchased and paid for while they are still aging in barrels in France. Selling wine as futures reduces the time inventory must be financed from four years to only one to two years. Of course there are other types of costs in such deals. For one, the wines must be offered at lower prices than they are expected to sell for upon release. The winemakers have obviously decided this cost is less than the cost of financing inventory through borrowed money, or they would not do it. Companies in other industries use similar techniques to speed up cash flow, such as factoring of accounts receivable. A major reason entities prepare cash budgets is to be sure they will have enough cash on hand to pay bills as they come due. If the budget indicates a temporary cash flow deficit, action must be taken to avoid the problem, and revised budgets must be prepared. Budgeting is not a static process.

Read the Focus On International Issues on p. 1,025 in Fundamental Financial & Managerial Accounting Concepts. What other businesses may use this technique or a similar technique to speed up cash flow? What are some of the risks involved? What are the benefits? FOCUS ON INTERNATIONAL ISSUES CASH FLOW PLANNING IN BORDEAUX The

Benefits of depreciation, cash budgeting, and cash flow

What is the benefit of depreciation? What are some of the issues for a financial manager in reviewing pro forma financial statements? Is cash budgeting necessary? Why or why not? Simplify the differences between cash flow, operating cash flow and free cash flow.

Cash Budget Needed

To avoid any uncertainty regarding his business' financing needs at the time when such needs may arise, Cyrus Brown wants to develop a cash budget for his latest venture: Cyrus Brown Manufacturing (CBM). He has estimated the following sales forecast for CBM over the next 9 months: March $250,000 April $27

Short Report on Cash Budgeting Problem

1. You work for Keafer Inc., a small, family-owned manufacturer of custom cardboard boxes. Up until now, payables and receivables were handled haphazardly with little planning. You have been hired to apply the skills you learned in business school to institute some formality to the process. Currently the firm has a cash balance

Description of Accounting: Cash budget

Please help with the following problem. Signal Florists (SF) operates a retail flower shop. Their sales for October total $5,000. They have projected revenue for the next three months as follows: November $12,000 December $23,000 January $8,000 February $10,000 SF allows its customers a 3% discount if the

cash budget

Use the following information to answer questions # 23 through 28 For each of the transactions listed below, indicate the effect it will have on the cash budget: P = Positive effect; N = Negative effect; 0 = No effect (Hint: how does the transaction below affect cash flow, in the current period, with only the amount of inform

Budget Lesson in Excel


Reasons for holding cash and the need for cash budgeting

I. Winner Where She Goes, Inc. is considering an investment of $800,000 in a new equipment line for boning and packaging beef products. The equipment has an expected life of 5 years. Sales are expected to be 900,000 units per year, at a price of $3 per unit. Fixed costs excluding depreciation are $300,000 per year, and variable

Capital Budget Evaluation Techniques for Guillermo Furniture

See attached file for data. Guillermo Furniture, a company that manufactures midgrade and high-end sofas, has just hired you as an accountant. The owner, Guillermo Navallez, has assigned you the tasks of determining which decisions provide the greatest returns. Recommend a course of action based on a capital budget evaluat


PLEASE SHOW CALCULATIONS 1. A firm expects to sale 25,000 units of its product at $11 per unit. Pretax income is predicted to be $60,000. If the variable costs per unit are $6, total fixed costs must be: 2. Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales. What will pretax income equ

Standard cost, cash collections, key to entire operating budget.

13. A standard cost or production standard that assumes maximum operating conditions and 100% efficiency at all times is called a(n): a. ideal standard. b. past experience standard. c. attainable standard. d. average standard. 14. A key to estimating an accurate amount of cash to be collected from sales is: a. the ac

Cash Budget and Cost Variance Analysis

Please see the attached file for better format. Problem 5: Preparation of a Cash Budget The sales budget of Mulls Company for the fourth quarter of 20X6 is as follows: October November December Sales $91,000 $76,000 $108,000 Sales are 20% cash, 80% credit

Cash Budget: The Hale Company

Cash Budget The Hale Company is currently working on its cash budget for the coming year. The following information is available: Projected sales for the coming year: Month Projected Sales January $850,000 February 750,000 March 730,000 April

Budgeting: cash collections

The following information is budgeted for Brown Lighting Company for next quarter: Sales........................................................... April May June $110,000 $130,000 $180,000 All sales at Brown are on credit. F

Capital Budgeting - finance

Complete each tab, based on the spreadsheet problems. Chapter 1 Spreadsheet Exercise Assume that Monsanto Corporation is considering the renovation and/or replacement of some of its older and outdated carpet-manufacturing equipment. Its objective is to improve the

After Tax Cash Flows - Capital Budgeting Problem for Kiddie Toys Company

Please help with Part 2/Page 3 Kiddie Toys Company Problem. After Tax Cash Flows The Kiddie Toys Company must decide whether to manufacture a new product line -- Breakdance Doll. The company has already spent $460,000 (which was totally tax deductible) to design the product and test the market. If the company decides to g

PROBLEM 10-3. Master Budget

Techlabs operates a computer training center.The following data relate to the preparation of a master budget for January 2012. 1. At the end of 2011, the company's general ledger indicated the following balances: Debits Credits Cash $ 50,000 Accounts Payable $ 40,000 Accounts receivable 40,000 Note payable 60,000 Equipmen

Capital Budgeting - Estimating Cash Flow

Every company has capital projects. - Verizon wireless is building a data center in Niagara County NY. The initial investment breaks down like this: - Land and utilities, $60 million. - Estimated building cost, $500 million. - Phase 1 equipment, 2011-13, $640 million. - Phase 2 equipment, 2014-15, $800 million. -

Building a Cash Budget

Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company's expected collection pattern and the budgeted sales for the period. Expected collection pattern: 65% collected in the month of sale 20% collected in the month after sale 10% collected in the second month afte

Monthly Cash Budget

The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year: March April Sales. $450,000 $520,000 Manufacturing costs 290,000 350,000 Selling and administrative expenses 41,400 46,400 Capital additions 250,000 --- The company expects to sell about

Capital Budgeting BrainMass Expert Explains

Degnan Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. Existing Machine Proposed Machine Cost $100,000 Cost $150,000 Purchased 2 yrs

production budget, purchasing budget, materials budget

Palermo Wholesalers is preparing its merchandise purchases budget. Budgeted sales are $400,000 for April and $475,000 for May. Cost of goods sold is expected to be 60% of sales. The company's desired ending inventory is 20% of the following month's cost of goods sold. Compute the required purchases for April.

Cash Budget and Collections Budget

Agee Industries expects credit sales for January, February, and March to be $200,000, $260,000 and $310,000, respectively. It is expected that 70% of the sales will be collected in the month of sale, and 30% will be collected in the following month. Compute cash collections from customers for each month.

'MBA Level Accounting Questions

1. Answer both independent parts. a. Dagwood Company manufactures three products (A,B,C). During the coming period, Dagwood expects to have 7,500 direct labor hours and 5,500 machine hours available. Given the following data, determine how much of each product Dagwood should produce (assume that Dagwood maintains no invento