1 answer

Bombs Away Video Games Corporation has forecasted the following monthly sales S 99,000 July $ 44,000...

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 months production is equal to annual sales (in units) divided by 12. Of each months 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 Decemberb. 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 January February March April May June Sales Cash receipts Cash sales Prior months credit sales Total cash receipts Bombs Away Video Games Corporation Cash Receipts Schedule July August September October November December Sales Cash receipts Cash sales Prior months credit sales Total cash receipts c. Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the mon in which they occur. Other cash payments, besides those for production costs, are $44,000 per month Bombs Away Video Games Corporation Cash Payments Schedule January February March April May June Production cost Other cash payments Total cash payment:s 0Bombs Away Video Games Corporation Cash Payments Schedule July August September October November December Production cost Other cash payments Total cash payments 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.) Bombs Away Video Games Corporation Cash Budget January February March April May June Beginning cash Net cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance Bombs Away Video Games Corporation Cash Budget July August September October November December Beginning cash Net cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance

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
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 January February March April May June Sales Cash receipts Cash sales Prior month's credit sales Total cash receipts Bombs Away Video Games Corporation Cash Receipts Schedule July August September October November December Sales Cash receipts Cash sales Prior month's credit sales Total cash receipts c. Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the mon in which they occur. Other cash payments, besides those for production costs, are $44,000 per month Bombs Away Video Games Corporation Cash Payments Schedule January February March April May June Production cost Other cash payments Total cash payment:s 0
Bombs Away Video Games Corporation Cash Payments Schedule July August September October November December Production cost Other cash payments Total cash payments 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.) Bombs Away Video Games Corporation Cash Budget January February March April May June Beginning cash Net cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance Bombs Away Video Games Corporation Cash Budget July August September October November December Beginning cash Net cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance

Answers

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
.

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