Part 1 – Cash Budget
1. Discuss the purpose of the cash budget.
2. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?
3. Give an example of how the capital expenditures budget affects other operating budgets.
Exercise: Flexible budget for Assembly Department OBJ. 2
Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:
Direct Labor per filing cabinet 12 minutes
Supervisor Salaries $150,000
Depreciation $24500 per month
Direct labor rate $22 per hour
Prepare a flexible budget for 18,000, 20,000, and 22,000 filing cabinets for the month of August 2016 in the Assembly Department, similar to Exhibit 5.