## Answered: - Problem 2 (20 points) Presented below are selected budget data

Problem 2 (20 points)

Presented below are selected budget data items for Globe Corporation for a three-month period:

 Sales Direct materials Direct labor Variable overhead Fixed overhead Selling and admin. costs Fixed loan payments OCTOBER \$820,000 \$123,000 \$90,000 \$65,600 \$140,000 \$312,000 \$155,000 NOVEMBER \$780,000 \$119,000 \$85,000 \$62,400 \$140,000 \$310,000 \$155,000 DECEMBER \$850,000 \$125,000 \$96,000 \$68,000 \$140,000 \$315,000 \$155,000

Sales were \$770,000 in August and \$790,000 in September. Material usage was \$115,000 in August and \$118,000 in September. All sales are on account, and accounts receivable is historically collected 15% in the month of sale, 65% in the month following sales, and the remainder two months after the sale. Materials are paid for 40% in the month used and 60% the following month. All other expenses are paid in the month incurred. The cash balance was \$35,000 at the beginning of October, and management wants to determine if the company will have enough cash to pay a year-end bonus.

Prepare a three-month cash budget, including a schedule for cash collections and material payments.

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This question was answered on: Oct 07, 2020

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