Unit 15 cash flow and trend

anthony_12c

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?

sdv

anthony_12c wrote: »

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_12c

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?

sdv

anthony_12c wrote: »

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!