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Problem 1: Cash Budget-(20 points.4 oints each he managen budgets. Budget data for March thro gement of Fort Peck Widget Manufacturing Company prepares monthly cash ugh May of next year is as follows: May April $80,000 $70,000 $85,000 $25,000 $28,000 $30,000 $22,000 $25,000 $28,000 $18,000 $20,000 $21,000 Mar Credit sales: Direct materials purchases Direct labor Manufacturing overhead: Selling & Administrative expenses: $14,000 $14,000 17,000 Additional information: Management expects to have a cash balance of $22,000 on April 1st of next year, to begin t second fiscal quarter of operations. All sales are made on credit. Management expects to collect 60% of credit sales during the same month that the sale is made, and 40% of credit sales during the following month. The anticipated sale of short term investments during April is expected to provide $4,000 in cash. Also, the anticipated receipt of a cash dividend during May is expected to provide $3,000 in cash. The purchase of direct materials is made on credit. Management plans to pay for 70% of urchases of direct materials during the same month that the purchase is made, and 30% of ases during the following month. Direct labor wages are paid during the same month as incurred. Manufacturing overhead costs include $2,000 per month of depreciation expense. Remaining costs are paid during the same month as incurred. Selling & Administrative expenses include $1,000 per month of depreciation expense Remaining costs are paid during the same month as incurred. Management maintains a line of credit with its bank to borrow up to $30,000 on short notice. If borrowing from the line of credit is needed, management will borrow the exact amount needed in order to maintain the minimum monthly cash balance according to company policy. The current balance of the bank line of credit is $0. Company policy is to maintain a minimum monthly cash balance of $20,000 Continue on next page

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