Prepare a cash budget for January 2006 to March 2006 with the following information given.

Prepare a cash budget for January 2006 to March 2006 with the following

information given.

Cash balance at 1 January 2006 = £5500

Selling price = £16.00 1/2 received in the production month

being considered.

1/2 received two months later

(e.g. in January receive 1/2 of January’s

plus 1/2 of November’s)

Direct labour = £5.00 paid same month of production

Direct materials = £5.00 paid the month before production

Variable costs = £4.00 1/2 paid in the month before production

1/2 paid in the month of production

(e.g. for January, pay 1/2 in December

plus 1/2 in January)

Fixed costs = £1500 per month.

Use the grid on page 8 to illustrate your answers.

Oct.

Sales

Production

1400

1250

Nov.

1000

1200

Dec.

800

1000

Jan.

1000

800

Feb.

1000

1500

Mar.

1200

1750

Apr.

1000

1400

Opening balances

Receipts (1)

Receipts (2)

TOTAL INCOME

Direct labour

Direct materials

Variable costs (1)

Variable costs (2)

Fixed costs

TOTAL COSTS

NET TOTAL FOR

MONTH

February March

8

Teesside University Open Learning

(Engineering)

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