Reference no: EM132101525

Problem - Danner Company expects to have a cash balance of $52,900 on January 1, 2014. Relevant monthly budget data for the first 2 months of 2014 are as follows.

Collections from customers: January $97,750, February $172,500.

Payments for direct materials: January $57,500, February $80,500.

Direct labor: January $34,500, February $51,750. Wages are paid in the month they are incurred.

Manufacturing overhead: January $24,150, February $28,750. These costs include depreciation of $1,150 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: January $17,250, February $23,000. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $11,500 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $28,750. The company wants to maintain a minimum monthly cash balance of $23,000.

Prepare a cash budget for January and February.