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Cash Budget Model - Case Study
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b) The following actual and budgeted financial data is available:
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 NOVDECJANFEBMAR
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Cash Sales
20,00024,00026,00026,00034,000
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Account Sales
160,000180,000150,000158,000190,000
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Account Purchases
50,00050,00050,00060,00040,000
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Wages50,00038,00034,00060,00060,000
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Overhead Expenses
18,00016,00014,00024,00024,000
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1) Sales collections from debtors are typically as follows:
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In the month of sale:
50.00%
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In the first month after month of sale:
30.00%
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In the second month after month of sale:
15.00%
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2) Materials purchased are paid for in the month after
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purchase. A discount is taken at:
3.00%
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3) Direct labour costs are paid for during the month in
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which they are incurred.
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4) Monthly overhead expenses include depreciation:
$5,000
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The cash flow from these expenses occurs during the
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month in which they are incurred.
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5) A tax assessment is payable in February:
$70,000
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6) A new machine is needed in February:
$160,000
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7) The last of five annual loan repayments is due
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in March:
$60,000
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8) The company has a policy of maintaining a bank
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balance of $80 000 at the end of each month:
$80,000
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Excess funds are lent at call.
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These invested funds are added to
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or withdrawn as necessary on the last day of the
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month. At the end of December this requirement was
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satisified.
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Funds invested at call on December 31:
$10,000
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Instructions:
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Develop a Cash Budget Model for the period Jan-Mar based on the above data showing all cash movements and recommending necessary action
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