70.2K

Verified Solution

Link Copied!

Problems wed B-X. It is January and the XYZ Company wishes to prepare a monthly cash forecast over the next four months. Sales for December were $1,100,000. Expected sales for the next four months are: and an uch Month Expected Sales January February March April $600,000 $800,000 $1,100,000 $800,000 od unt SOR ted sar the herd ly ceive OS inal Thirty percent of the firm's sales are for cash; the remainder are collected in the month following the sale (there are no bad debts). Disbursements consist of payments for raw materials, direct labor, other operating expenses, purchases of fixed assets, and taxes. Costs of sales are 75 percent of sales. Of these costs of sales, 38 percent are raw material costs and 62 percent are direct labor costs. Direct labor costs are paid in the month incurred, while raw ma- terials are purchased on net 30-day terms. Other operating expenses total $150,000 per month. Expenditures for fixed assets of $75,000 are to be made in February and April, and tax payments of $110,000 are to be made in January and March. As of January 1, there are no surpluses or deficits and the firm's cash balance is $83,000. The firm keeps a cash balance equal to 10 percent of the month's cost of sales. Generate a monthly cash forecast for the upcoming four months. ofte el

Answer & Explanation Solved by verified expert

See Answer