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Question

Peanut Ltd. sells a single product at a price of $25 per unit. This product

costs Peanut $15 per unit to manufacture.

Peanut's actual sales over the past month (December) and projected sales over the next four months (January to April) are as follows:

  December  200,000 units March 250,000 units

  January 175,000 units   April 275,000 units

  February 150,000 units

50% of sales are for cash, and the remaining 50% are on credit and paid in full in one month's time

Units are produced one month in advance of sales, and the costs of production are paid 30% in the month of production and 70% in the month following production.

Prepare Peanut's cash budget for the months of January, February and March.

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