Peavy Company expects to have a cash balance of $46,000 on January 1, 2010. Relevant monthly budget data for the first 2 months of 2010 are as…

Peavy Company expects to have a cash balance of $46,000 on January 1, 2010. Relevant monthly budget data for the first 2 months of 2010 are as follows.Collections from customers: January $100,000, February $160,000. Payments for direct materials: January $60,000, February $80,000.Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred.Manufacturing overhead: January $21,000, February $31,000. These costs include depre- ciation of $1,000 per month. All other overhead costs are paid as incurred.Selling and administrative expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.Sales of marketable securities in January are expected to realize $10,000 in cash. Peavy Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $25,000.InstructionsPrepare a cash budget for January and February.

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