"S4-2321. Dina’s Lamp Company has forecast its sales in units as follows:1,000JanuaryFebruary 800March 900April 1,400May 1,550June 1,800July1,400Dina’s always keeps an ending inventory equal to 120 percent of the next month’s expectedsales. The ending inventory for December (January’s beginning inventory) is 1,200 units,which is consistent with this policy.Materials cost $14 per unit and are paid for in the month after purchase. Labor cost is$7 per unit and is paid in the month the cost is incurred. Overhead costs are $8,000 permonth. Interest of $10,000 is scheduled to be paid in March, and employee bonuses of$15,500 will be paid in June.Prepare a monthly production schedule and a monthly summary of cash payments forJanuary through June. Dina produced 800 units in December. S4-244-21. Solution:Dina's Lamp CompanyProduction Schedule Jan. Feb. March April May June JulyForecasted unit sales 1,000900 1,400 1,550 1,800 1,400+ Desired ending inventory 960 1,080 1,680 1,860 2,160 1,680 – Beginning inventory 1,200960 1,080 1,680 1,860 2,160 = Units to be produced 760 920 1,500 1,580 1,850 1,320 Summary of Cash Payments Dec. Jan. Feb. March April May JuneUnits produced 800 760 920 1,500 1,580 1,850 1,320Material cost ($14/unit) month after purchase $11,200 $10,640 $12,880 $21,000 $22,120 $25,900Labor cost ($5/unit) month incurred 5,320 6,440 10,500 11,060 12,950 $9,240Overhead cost8,000 8,000 8,000 8,000 8,000 8,000Interest10,000 Employee bonuses 15,500Total Cash Payments $24,520 $25,080 $41,380 $40,060 $43,070 $58,640 22. Graham Potato Company has projected sales of $6,000 in September, $10,000 in October,$16,000 in November, and $12,000 in December. Of the company’s sales, 20 percent arepaid for by cash and 80 percent are sold on credit. Experience, shows that 40 percent ofaccounts receivable are paid in the month after the sale, while the remaining 60 percent arepaid two months after. Determine collections for November and December.Also assume Graham’s cash payments for November and December are $13,000 and$6,000, respectively. The beginning cash balance in November is $5,000, which is thedesired minimum balance.Prepare a cash budget with borrowing needed or repayments for November andDecember. (You will need to prepare a cash receipts schedule first.)4-22. Solution:Graham Potato CompanyCash Receipts Schedule September October November DecemberSales $6,000 $10,000 $16,000 $12,000Credit sales 4,800 8,000 12,800 9,600(80%)Cash sales 1,200 2,000 3,200 2,400(20%)Collectionsin month 3,200 5,120after sales(40%)Collectionstwo months 2,880 4,800after sales(60%)Total cashreceipts $9,280 $12,320S4-25 Graham Potato Company (Continued)Cash BudgetNovember DecemberCash receipts $9,280 $12,320Cash payments 13,000 6,000Net Cash Flow (3,720) 6,320Beginning Cash Balance 5,000 5,000Cumulative Cash Balance 1,280 11,320Monthly Loan or 3,720 (3,720)(Repayment)Cumulative Loan Balance 3,720 -0-Ending Cash Balance $5,000 $ 7,600S4-26 S4-2723. Juan’s Taco Company has restaurants in five college towns. Juan wants to expand intoAustin and College Station and needs a bank loan to do this. Mr. Bryan, the banker, willfinance construction if Juan can present an acceptable three-month financial plan forJanuary through March. Following are actual and forecasted sales figures:Additional Actual Forecast InformationNovember $120,000 January $190,000 April forecast $230,000December 140,000 February 210,000March 230,000Of Juan’s sales, 30 percent are for cash and the remaining 70 percent are on credit.Of credit sales, 40 percent are paid in the month after sale and 60 percent are paid in thesecond month after the sale. Materials cost 20 percent of sales and are paid for in cash.Labor expense is 50 percent of sales and is also paid in the month of sales. Selling andadministrative expense is 5 percent of sales and is also paid in the month of sales.Overhead expense is $12,000 in cash per month; depreciation expense is $25,000 permonth. Taxes of $20,000 and dividends of $16,000 will be paid in March. Cash at thebeginning of January is $70,000, and the minimum desired cash balance is $65,000.For January, February, and March, prepare a schedule of monthly cash receipts,monthly cash payments, and a complete monthly cash budget with borrowings andrepayments. "