Striker Corporation is preparing its cash payments budget for next month. The following information pertains to the cash payments: How much cash will be paid out next month? a. Striker Corporation pays for 55% of its direct materials purchases in the month of purchase and the remainder the following month. Last month's direct material purchases were $73,000, while the company anticipates $85,000 of direct material purchases next month. b. Direct labor for the upcoming month is budgeted to be $37,000 and will be paid at the end of the upcoming month. c. Manufacturing overhead is estimated to be 150% of direct labor cost each month and is paid in the month in which it is incurred. This monthly estimate includes $18,000 of depreciation on the plant and equipment. d. Monthly operating expenses for next month are expected to be $45,000, which includes $2,800 of depreciation on office equipment and $1,200 of bad debt expense. These monthly operating expenses are paid during the month in which they are incurred. e. Striker Corporation will be making an estimated tax payment of $7,100 next month.
Striker Corporation is preparing its cash payments budget for next month. The following information pertains to the cash payments: How much cash will be paid out next month? a. Striker Corporation pays for 55% of its direct materials purchases in the month of purchase and the remainder the following month. Last month's direct material purchases were $73,000, while the company anticipates $85,000 of direct material purchases next month. b. Direct labor for the upcoming month is budgeted to be $37,000 and will be paid at the end of the upcoming month. c. Manufacturing overhead is estimated to be 150% of direct labor cost each month and is paid in the month in which it is incurred. This monthly estimate includes $18,000 of depreciation on the plant and equipment. d. Monthly operating expenses for next month are expected to be $45,000, which includes $2,800 of depreciation on office equipment and $1,200 of bad debt expense. These monthly operating expenses are paid during the month in which they are incurred. e. Striker Corporation will be making an estimated tax payment of $7,100 next month.
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 4P
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Striker Corporation is preparing its cash payments budget for next month. The following information pertains to the cash payments: How much cash will be paid out next month?
|
a.
|
Striker
Corporation pays for
55%
of its direct materials purchases in the month of purchase and the remainder the following month. Last month's direct material purchases were
$73,000,
while the company anticipates
$85,000
of direct material purchases next month. |
|
b.
|
Direct labor for the upcoming month is budgeted to be
$37,000
and will be paid at the end of the upcoming month. |
|
c.
|
Manufacturing overhead is estimated to be
150%
of direct labor cost each month and is paid in the month in which it is incurred. This monthly estimate includes
$18,000
of depreciation on the plant and equipment. |
|
d.
|
Monthly operating expenses for next month are expected to be
$45,000,
which includes
$2,800
of depreciation on office equipment and
$1,200
of |
|
e.
|
Striker
Corporation will be making an estimated tax payment of
$7,100
next month. |
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