Reference no: EM132972565

Martin Company's chief financial officer feels that it is important to have data for the entire quarter especially since their financial forecasts indicate some difficult economic periods in the coming year. March information has been budgeted as follows:

Collections from customers: $375,000
Payments for direct materials: $206,000
Direct labor: Wages paid in March $116,000
Manufacturing overhead: $64,500. This includes the monthly depreciation of $5,000.
Selling and administrative expenses: $51,600. This cost is exclusive of depreciation.
Marketable securities of $50,000 can be sold if needed for additional cash.

Problem 1: Prepare a cash budget for March assuming that the company does not sell the marketable securities.

Problem 2: What is the maximum amount the company can borrow during March? Does this provide the company with an adequate ending cash balance?

Problem 3: How much does the company need to borrow if the marketable securities are sold?

Problem 4: Comment on the status of the company's cash budget for March.