Reference no: EM132633124

Bombs Away Video Games Corporation has forecasted the following monthly sales:

January               $118,000

July                      $63,000

February             111,000

August               63,000

March                43,000

September         73,000

April                 43,000

October          103,000

May               38,000

November      123,000

June                53,000

December        141,000

Total annual sales = $972,000

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, 30 percent are for cash and 70 percent are on account. All accounts receivable are collected in the month after the sale is made.

Problem a. Construct a monthly production and inventory schedule in units. Beginning inventory in January is 40,000 units.

Problem b. Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.

Problem 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 $60,000 per month.

Problem 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.)