Lily Company expects to have a cash balance of $49,500 on January 1, 2022. Relevant monthly budget data for the first 2 months of 2022 are as follows. Collections from customers: January $93,500, February $165,000. Payments for direct materials: January $55,000, February $82,500. Direct labor: January $33,000, February $49,500. Wages are paid in the month they are incurred. Manufacturing overhead: January $23,100, February $27,500. These costs include depreciation of $1,650 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $16,500, February $22,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,200 in cash. Lily Company has a line of credit at a local bank that enables it to borrow up to $27,500. The company wants to maintain a minimum monthly cash balance of $22,000. Prepare a cash budget for January and February. LILY COMPANY Cash Budget January February
Lily Company expects to have a cash balance of $49,500 on January 1, 2022. Relevant monthly budget data for the first 2 months of 2022 are as follows. Collections from customers: January $93,500, February $165,000. Payments for direct materials: January $55,000, February $82,500. Direct labor: January $33,000, February $49,500. Wages are paid in the month they are incurred. Manufacturing overhead: January $23,100, February $27,500. These costs include depreciation of $1,650 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $16,500, February $22,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $13,200 in cash. Lily Company has a line of credit at a local bank that enables it to borrow up to $27,500. The company wants to maintain a minimum monthly cash balance of $22,000. Prepare a cash budget for January and February. LILY COMPANY Cash Budget January February
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Lily Company expects to have a cash balance of $49,500 on January 1, 2022. Relevant monthly budget data for the first 2 months of
2022 are as follows.
Collections from customers: January $93,500, February $165,000.
Payments for direct materials: January $55,000, February $82,500.
Direct labor: January $33,000, February $49,500. Wages are paid in the month they are incurred.
Manufacturing overhead: January $23,100, February $27,500. These costs include depreciation of $1,650 per month. All other
overhead costs are paid as incurred.
Selling and administrative expenses: January $16,500, February $22,000. These costs are exclusive of depreciation. They are paid as
incurred.
Sales of marketable securities in January are expected to realize $13,200 in cash. Lily Company has a line of credit at a local bank that
enables it to borrow up to $27,500. The company wants to maintain a minimum monthly cash balance of $22,000.
Prepare a cash budget for January and February.
LILY COMPANY
Cash Budget
January
February
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