Unit 15 cash flow and trend

anthony_12canthony_12c Feels At HomePosts: 40Registered
Just working through some examples and there is a questions i am unsire of.

It includes a trend and seasonal variation, but ask me to set out budgeted cash receipts.

Question.
Company sells units for £20 and gets 75% of cash in month with remaining 25% following month.

Month: June -- July -- Aug
Trend: 20,000 -- 24,000 -- 25,500
Seas. Var.: +1000 -- +2000 -- -500

So for budgeted cash receipts should i ignore the seasonal varitation and is that simply there to throw me off?

Comments

  • sdvsdv Experienced Mentor Posts: 585Registered
    Just working through some examples and there is a questions i am unsire of.

    It includes a trend and seasonal variation, but ask me to set out budgeted cash receipts.

    Question.
    Company sells units for £20 and gets 75% of cash in month with remaining 25% following month.

    Month: June -- July -- Aug
    Trend: 20,000 -- 24,000 -- 25,500
    Seas. Var.: +1000 -- +2000 -- -500

    So for budgeted cash receipts should i ignore the seasonal varitation and is that simply there to throw me off?

    I will stratwith an example

    Month............Sales (A)..........Trend(B)...........Seasonal Variation (A-B)

    Jan................10,000.............9,000................+1,000
    Feb.................8,000.............7,500.................+500
    Mar................11,000...........12,000................-1,000

    To answer your question, you need to work out ACTUAL Units from trend and seasonal Variation.

    Once sales units worked out multiply with the selling price per unit to arrive at monthly sales amount

    monnthly sales amount times 75% cash received in month of sale and 25% the following month

    work out for from your fighues

    Month............Sales (A)..........Trend(B)...........Seasonal Variation (A-B)

    Jun................??????.............20,000................+1,000
    Jul.................??????.............24,000.................+2,000
    Aug................?????.............25,500.....................-500

    from the above layout you should be able to work out the sales figures
  • anthony_12canthony_12c Feels At Home Posts: 40Registered
    thanks for the reply. So by working out the actual sales therefore using my example would be:

    Month............Sales (A)..........Trend(B)...........Seasonal Variation (A-B)

    Jun................21,000.............20,000...... ..........+1,000
    Jul.................26,000.............24,000..... ............+2,000
    Aug................25,000.............25,500....... ..............-500


    So then budgeted cash receipts:

    Jun 15750
    Jul 19500 + 5250 = 24750
    Aug 18750 + 6500 = 25250

    Is that correct or have i misunderstood?
  • sdvsdv Experienced Mentor Posts: 585Registered

    So then budgeted cash receipts:

    Jun 15750
    Jul 19500 + 5250 = 24750
    Aug 18750 + 6500 = 25250

    Is that correct or have i misunderstood?

    correct. well done!
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