Help, I need assistance in figuring out a Bash Budget for the
following information:
Sales forecast:
March 2004 $250,000
April 275,000
May 320,000
June 450,000
July 575,000
August 700,000
September 825,000
October 350,000
November 285,000
The following collection estimates regarding the forecast sales:
Collection within the month of sale, 10%; collection the month
following sales, 65%, and collection the second month following sales,
25%. Payments for direct manufacturing costs like raw materials and
labor are made during the month that follows the one in which such
costs have been incurred. These costs are estimated as follows:
March 2004 $187,500
April 206,250
May 240,000
June 337,500
July 431,250
August 525,000
September 618,750
October 262,500
Administrative salaries will approximately amount to $35,000 a month;
lease payments around $15,000 a month; depreciation charges, 15,000 a
month; a one-time new plant investment in the amount of $95,000 is
expected to be incurred and paid in June; income tax payments
estimated to be around $ 55,000 will be due in both June and
September; and finally, miscellaneous costs are estimated to be around
$10,000 a month. Cash on hand on March 1 will be around $50,000; and a
minimum cash balance of $50,000 shall be on hand at all times.
I need to prepare a monthly cash budget for the nine month period,
March through November.
Based on the findings in part b, will the company need any outside financing?
What is the minimum line of credit that will be needed?
What does the cash position during the budget period signify? Are
there any concerns for the company in this regard?
Would a bank would you want this company as a client? Why or why not? |
