Reference no: EM132599316

Question - Carla Vista Company expects to have a cash balance of $54,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.

Collections from customers: January $102,000, February $180,000.

Payments for direct materials: January $60,000, February $90,000.

Direct labor: January $36,000, February $54,000. Wages are paid in the month they are incurred.

Manufacturing overhead: January $25,200, February $30,000. These costs include depreciation of $1,800 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: January $18,000, February $24,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $14,400 in cash. Carla Vista Company has a line of credit at a local bank that enables it to borrow up to $30,000. The company wants to maintain a minimum monthly cash balance of $24,000.

Prepare a cash budget for January and February.