E9-40fcomplete - 6,000 units Revised ending inventory 9,600...

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f. As illustrated in the revised cash budget, Jacobs does not have enough cash to purchase one-hundred percent of February’s production needs. t Jacobs Incorporated Cash Budget with Additional Purchases of Raw Materials For the Month of January 2011 Beginning balance $ 5,000 Receipts: December sales (6,250 × $50 × 0.50) $156,250 January sales (5,000 × $50 × 0.50) 125,000 281,250 Total cash available 286,250 Disbursements: Purchases * 150,000 Direct labor 60,000 Variable manufacturing overhead 30,000 Fixed manufacturing overhead (exclude depreciation) 20,000 Variable selling and administrative (5,000 × $5) 25,000 Fixed selling and administrative 20,000 Dividend 10,000 (315,000) Ending Balance $(28,750) NOT FEASIBLE Inadequate cash *Current requirements
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Unformatted text preview: 6,000 units Revised ending inventory 9,600 units Total requirements 15,600 units Beginning inventory (600) units Purchases 15,000 units Purchases at $10 each $150,000 Being aware of this cash shortage in advance, management has time to consider alternatives actions that will alleviate the possible cash shortage. Possible actions include: P Conserve cash by slower payments of bills. Perhaps they do not have to pay all debts in the month incurred. p Delay the cash dividend. D Encourage customers to pay cash at the time of sale. Invest more cash in the business. For the size of the operations there may be inadequate owner investment. b Secure a line of credit with the bank....
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This note was uploaded on 05/08/2011 for the course 193431918X 711 taught by Professor Braham during the Spring '11 term at Missouri (Mizzou).

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E9-40fcomplete - 6,000 units Revised ending inventory 9,600...

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