Question

Bombs Away Video Games Corporation has forecasted the following monthly sales:
  

January	$	106,000	July	$	51,000
February		99,000	August		51,000
March		31,000	September		61,000
April		31,000	October		91,000
May		26,000	November		111,000
June		41,000	December		129,000
Total annual sales = $828,000

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, 30 percent are for cash and 70 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 31,000 units.
  

Bom Production and Inventory Schedule in Units Beginning bs Away Video Games Corporation Ending Invento Production Sales Invento January February March April May June 31,000 Ul August September October November December

b. Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.
  

c. Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $51,000 per month.
  

d. Prepare a monthly cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $5,000, which is also the minimum desired. (Negative amounts should be indicated by a minus sign.)
  

Answer 1

Workings for Part A:

Workings of Sales Units for Part A:

Part A Final Answer:

Part B: January to June Cash Receipt Schedule

Part B: July to December Cash Receipt Schedule

Answer to Part C: Cash Payment Schedule for the entire year

Answer to Part D: Cash Budget from January to June

Answer to Part D: Cash Budget from July to December