Question

Shower Sales Ltd sells plumbing fittings in a rapidly developing area. Its sales in June
are $500
000. From recent experience, the manager can confidently predict that sales
will increase 10% each month cumulatively. 10% of sales are for cash, 80% are paid for
in the next calendar month and 10% in the following calendar month. Purchases are
$380
000 in
June. The manager decides to keep stock levels high and makes purchases in
any month to the value of 80% of the previous month’s sales. These purchases are paid
for in the next calendar month. Cash operating expenses are $50
000 per month.
Compute a month
ly cash budget for July to December

Answer 1

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