Organisation reduce problem caused by budgetary slack

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Reference no: EM132174785

The following information is obtained from the financial records of Deli Incorporated: Sales Purchases April $120 000 $70 000 May 110 000 80 000 June 100 000 60 000 July 130 000 90 000 Receipts from customers are normally 60% in the month of sale, 25% in the month following the sale, and 7% in the second following the sale. The balance is expected to be uncollectable. Purchases for August are budgeted at $200 000, and sales for August are forecast at $220 000. Cash payments for expenses (other than purchases) are expected to be $48 000 for the month of August. Deli takes full advantage of the 5% discount allowed on purchases paid by 15th day of the following month. Required: a) Compute the expected cash receipts for Deli during August. b) Compute the expected cash payments for Deli during August. c) How can an organisation reduce the problem caused by budgetary slack?

Reference no: EM132174785

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