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You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a designer's silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favourable impression on the president and have assembled the information below.

The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows:

The large buildup in sales before and during June is due to Father's Day. Ending inventories are supposed to equal 90% of the next month's sales in units. The ties cost the company $5 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month's sales is collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible.

The company's monthly selling and administrative expenses are given below:

All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $25,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is given below:

The company has an agreement with a bank that allows it to borrow at the beginning of each month, up to a total loan balance of $140,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible, while still retaining at least $10,000 in cash.

INPUT SECTION
Recent and Forecasted Sales (Units)			Cash Collection (Sales)
February (Actual)	24,000		Month of Sale	25%
March (Actual)	28,000		Following Month	50%
April	35,000		Second Month Following Sale	25%
May	45,000		Purchases related
June	60,000		Cash Payments (Purchases)
July	40,000		Month of Purchases	50%
			Following Month	50%
Selling price and cost			Other (Purchases)
Selling Price per unit	$ 8.00		Ending Inventory (% of next month's sale)	90%
Cost per unit	$ 5.00		Accounts Payable Balance, March 31	$ 85,750
Cash and loan related			Other Cash Payments
Beginning Cash Balance	$ 14,000		Land (May)	$ 25,000
Minimum Cash Balance	$ 10,000		Dividends (April)	$ 12,000
Maximum Loan	$ 140,000
Interest Rate Per Month	1.00%
Monthly Selling & Admin. Expenses
Variable:			Fixed:
Sales Commission	$ 1.00	per tie	Wages and Salaries	$ 22,000
			Utilities	$ 14,000
			Insurance	$ 1,200
			Depreciation	$ 1,500
			Miscellaneous	$ 3,000

-A Schedule of expected cash disbursements for merchandise purchases by month and in total.

-An Operating expenses budget, by month and in total.

Please include any excel formulas required, Thanks.

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