Solved: Financial budgets cash outflows Country Club

Road Nurseries
Financial budgets cash outflows Country Club Road Nurseries

Financial budgets: cash outflows Country Club Road Nurseries grows and sells garden plants.
The nursery is active between January and October each year. During January, the potting
tables and equipment are prepared. The potting and seeding are done in February. In March
and April, the plants are cultivated, watered, and fertilized. May and June are the peak selling
months. July, August, and September are the peak months for visiting customers in their homes
to provide them with advice and help solve their problems. During October, the equipment and
buildings are secured for the winter months, and in November and December, full-time
employees take their paid holidays, and the business is closed.
The nursery employs 15 full-time staff and, depending on the season, up to 20 part-time staff.
The full-time staff members are paid an average salary of $2,700 per month and work 160 hours
per month. The part-time staff members are paid $10 per hour. Because the nursery relies on
local students for part-time work, there is no shortage of trained people willing to work the hours
that are available. The ratio of full-time employee hours worked to part-time employee hours
worked is as follows: January, 5:1; February, 5:1; March, 3:1; April, 3:1, May, 1:1; June, 1:1;
July, 1:1; August, 1:1; September, 2:1; and October, 4:1. Because part-time students are used
mainly for moving and selling activities, their work creates very little incremental support costs.
Fixed costs, other than wages, associated with this operation are about $55,000 per month. The
cost drivers in this operation are the activities that the full-time employees undertake. These
cost drivers are proportional to the hours worked by the full-time employees. The variable costs
depend on the season and reflect the common employee activities during that season. Average
variable costs per employee hour worked are as follows: January, $15; February, $15; March,
$15; April, $15; May, $5; June, $5; July, $20; August, $20; September, $20; and October, $10.
These variable costs include both support items such as power and water and direct items such
as soil and pots. Assume that all expenses are paid in the month they are incurred. On the
basis of the information provided, determine the cash outflows for the upcoming year.

Financial budgets cash outflows Country Club Road Nurseries

ANSWER
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