Question

Tyson Inc. has projected sales and production in units for the second quarter of the coming year as follows:

	April	May	June
Sales	50,000	40,000	60,000
Production	60,000	50,000	50,000

cash related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April. All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $500,000 ($90,000 from Feb. sales and $41,000 from March's sales).

1. prepare a schedule for each month showing budgeted cash disbursements

2. prepare a schedule for each month showing budgeted cash receipts

please show calculations

Answer 1

1

cash disbursement budget	april	may	june
production cost	300000	250000	250000
cash disbursement
production this month	120000	100000	100000
production prior month	190000	120000	100000
selling and administration	100000	100000	100000
total disbursement	410000	320000	300000

2

cash receipts budgets	april	may	june
total sales	700000	560000	840000
cash receipts
february sales	90000
march sales	410000
april sales	420000	210000	70000
may sales		336000	168000
june sales			504000
total receipts	920000	546000	742000