Question

Bombs Away Video Games Corporation has forecasted the following monthly sales S 99,000 July $ 44,000 44,000 54,000 84,000 104,000 122,000 January February March ril May June 92,000 August 24,000September 24,000 October 19,000 November 34,000 December Total annual sales $744,000 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, 20 percent are for cash and 80 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 24,000 units Bombs Away Video Games Corporation Production and Inventory Schedule in Units Beginning Production 12,400 12,400 12,400 12,400 12,400 12,400 12,400 12,400 12,400 12,400 12,400 12,400 Ending Invento Sales Invent 24,000 16,600 10,600 18,200 25,800 34,400 40,000 43,600 47,200 48,800 44,400 36,000 19,800 18,400 4,800 4,800 3,800 6,800 8,800 8,800 10,800 16,800 20,800 24,400 16,600 10,600 18,200 25,800 34,400 40,000 43,600 47,200 48,800 44,400 36,000 24,000 January February March April June July August September October November December

Answer 1

Solution b:

Bombs Away Video games Corporation
Cash Receipts Schedule
	January	February	March	April	May	June	July	August	September	October	November	December
Sales	$99,000	$92,000	$24,000	$24,000	$19,000	$34,000	$44,000	$44,000	$54,000	$84,000	$1,04,000	$1,22,000
Cash Receipts:
Cash Sales (20% of sales)	$19,800	$18,400	$4,800	$4,800	$3,800	$6,800	$8,800	$8,800	$10,800	$16,800	$20,800	$24,400
Prior Month's credit sales (80% of prior month sales)	$80,000	$79,200	$73,600	$19,200	$19,200	$15,200	$27,200	$35,200	$35,200	$43,200	$67,200	$83,200
Total Cash Receipts	$99,800	$97,600	$78,400	$24,000	$23,000	$22,000	$36,000	$44,000	$46,000	$60,000	$88,000	$1,07,600

Bombs Away Video games Corporation
Cash Payments Schedule
	January	February	March	April	May	June	July	August	September	October	November	December
Production costs (12400*$2)	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800	$24,800
Other Cash Payments	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000	$44,000
Total Cash Payments	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800	$68,800

Bombs Away Video games Corporation
Cash Budget
	January	February	March	April	May	June	July	August	September	October	November	December
Beginning Cash	$5,000	$36,000	$64,800	$74,400	$29,600	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000
Net Cash Flow	$31,000	$28,800	$9,600	-$44,800	-$45,800	-$46,800	-$32,800	-$24,800	-$22,800	-$8,800	$19,200	$38,800
Cumulative Cash Balance	$36,000	$64,800	$74,400	$29,600	-$16,200	-$41,800	-$27,800	-$19,800	-$17,800	-$3,800	$24,200	$43,800
Monthly loan or (repayment)	$0	$0	$0	$0	$21,200	$46,800	$32,800	$24,800	$22,800	$8,800	-$19,200	-$38,800
Ending Cash Balance	$36,000	$64,800	$74,400	$29,600	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000
Cumulative loan balance	$0	$0	$0	$0	$21,200	$68,000	$1,00,800	$1,25,600	$1,48,400	$1,57,200	$1,38,000	$99,200