Reference no: EM132723826

Danner Company expects to have a cash balance of $49,500 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.

Collections from customers:

January $93,500,

February $165,000.

Payments for direct materials:

January $55,000,

February $82,500.

Direct labor:

January $33,000,

February $49,500.

Wages are paid in the month they are incurred. Manufacturing overhead:

January $23,100, February $27,500.

These costs include depreciation of $1,650 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses:

January $16,500,

February $22,000.

These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $13,200 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $27,500. The company wants to maintain a minimum monthly cash balance of $22,000.

Problem 1: Do a cash budget for January and February.