Question

          January$98,000    July$43,000    February 91,000    August 43,000    March 23,000    September 53,000    April 23,000    October 83,000    May 18,000    November 103,000    June 33,000    December 121,000  Total annual sales = $732,000
 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, 40 percent are for cash and 60 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 23,000 units.
 Bombs Away Video Games CorporationProduction and inventory schedule in units Beginning
inventory+Production–Sales=Ending
inventory  January23,000          February       March       April       May       June       July       August       September       October       November       December     
 b.Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.
 Bombs Away Video Games CorporationCash Receipts Schedule January February March April May June  Sales$  $  $  $  $  $           Cash receipts:             Cash sales$  $  $  $  $  $     Prior month’s credit sales               Total cash receipts$  $  $  $  $  $             
 Bombs Away Video Games CorporationCash 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 month in which they occur. Other cash payments, besides those for production costs, are $43,000 per month.
 Bombs Away Video Games CorporationCash Payments ScheduleConstant production January February March April May June  Production cost$  $  $  $  $  $     Other cash payments               Total cash payments$  $  $  $  $  $             Bombs Away Video Games CorporationCash Payments ScheduleConstant production 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. (Leave no cells blank – be certain to enter “0” wherever required. Negative amounts should be indicated by a minus sign.)
 Bombs Away Video Games CorporationCash 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 CorporationCash 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$  $  $  $  $  $         

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