Question

Bombs Away Video Games Corporation has forecasted the following monthly sales January $107,000 July February100,000 August March $ 52,000 52,000 32,000 September 62,000 92,000 27,000 November 112,000 42,000 December 130,000 ril May June 32,000 October Total annual sales $840,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12. Of each month's sales, 40 percent are for cash and 60 percent are on account. All accounts receivable are collected in the month after the sale is made a. Construct a monthly production and inventory schedule in units. Beginning inventory in January is 32,000 units Bombs Away Video Games Corporation Production and Inventory Schedule in Units Beginning+Production-|Sales Invento Invento Ending Janua February March April Ma June 32,000 August September October November December b. Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000 Bombs Away Video Games Corporation Cash Receipts Schedule Februa Janua March April Ma June Sales Cash receipts Cash sales Prior month's credit sales Total cash receipts $

Answer 1

Particulars	January	February	March	April	May	June	July	August	September	October	November	December
Sales Revenue	1,07,000.00	1,00,000.00	32,000.00	32,000.00	27,000.00	42,000.00	52,000.00	52,000.00	62,000.00	92,000.00	1,12,000.00	1,30,000.00
Sales Unit @5 PU	21400	20000	6400	6400	5400	8400	10400	10400	12400	18400	22400	26000
Production PM (Total Sales/12)	14000	14000	14000	14000	14000	14000	14000	14000	14000	14000	14000	14000
Production Cost @ 2 PU	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00	28,000.00

Solution A

Bombs Away Video Games Corporation
Production & Inventory Schedules in Units
	Beginning Inventory	+	Production	-	Sales	=	Ending Inventory
January	32000	+	14000	-	21400	=	24,600.00
February	24600	+	14000	-	20000	=	18,600.00
March	18600	+	14000	-	6400	=	26,200.00
April	26200	+	14000	-	6400	=	33,800.00
May	33800	+	14000	-	5400	=	42,400.00
June	42400	+	14000	-	8400	=	48,000.00
July	48000	+	14000	-	10400	=	51,600.00
August	51600	+	14000	-	10400	=	55,200.00
September	55200	+	14000	-	12400	=	56,800.00
October	56800	+	14000	-	18400	=	52,400.00
November	52400	+	14000	-	22400	=	44,000.00
December	44000	+	14000	-	26000	=	32,000.00

Solution B

Bombs Away Video Games Corporation
Cash Receipts Schedule
	January	February	March	April	May	June	July	August	September	October	November	December
Sales	1,07,000.00	1,00,000.00	32,000.00	32,000.00	27,000.00	42,000.00	52,000.00	52,000.00	62,000.00	92,000.00	1,12,000.00	1,30,000.00
Cash Receipts
Cash Sales @ 40%	42,800.00	40,000.00	12,800.00	12,800.00	10,800.00	16,800.00	20,800.00	20,800.00	24,800.00	36,800.00	44,800.00	52,000.00
Prior Month's Credit Sales	60000	64,200.00	60,000.00	19,200.00	19,200.00	16,200.00	25,200.00	31,200.00	31,200.00	37,200.00	55,200.00	67,200.00
Total Receipts	102800	104200	72800	32000	30000	33000	46000	52000	56000	74000	100000	119200

Solution C

Bombs Away Video Games Corporation
Cash Payment Schedule
	January	February	March	April	May	June	July	August	September	October	November	December
Production Cost @ 2 PU	28000	28000	28000	28000	28000	28000	28000	28000	28000	28000	28000	28000
Other Cash Payment	52000	52000	52000	52000	52000	52000	52000	52000	52000	52000	52000	52000
Total Cash Payment	80000	80000	80000	80000	80000	80000	80000	80000	80000	80000	80000	80000

Solution D

Bombs Away Video Games Corporation
Cash Budget
	January	February	March	April	May	June	July	August	September	October	November	December
Beginning Cash	5000	27800	52000	44800	5000	5000	5000	5000	5000	5000	5000	5000
Net Cash Flow	22800	24200	-7200	-48000	-50000	-47000	-34000	-28000	-24000	-6000	20000	39200
Cumulative Cash Balance	27800	52000	44800	-3200	-45000	-42000	-29000	-23000	-19000	-1000	25000	44200
Monthly Loan or (Repayment)	0	0	0	-8200	-50000	-47000	-34000	-28000	-24000	-6000	20000	39200
Ending Cash Flow	27800	52000	44800	5000	5000	5000	5000	5000	5000	5000	5000	5000
Cumulative Loan Balance	0	0	0	-8200	-58200	-105200	-139200	-167200	-191200	-197200	-177200	-138000