Question

1. Prepare a sales budget for the first quarter (Q1) and the first quarter in total. The selling price per unit is $50.00.

December 50,000/ January 70,000/February 100,000 /March 60,000 / April 100,000

Past experience shows that 45% of sales are collected in the month of the sale, and 55% in the month following the sale.

2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value service such as quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 45% of next month’s projected sales. All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases are paid in February).

3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $70,000, and this was the balance in the cash account on January 1^st. Other expenses include $35,000 per month for rent, $24,000 per month for advertising, and $66,000 per month for depreciation. In addition, variable Selling & Administrative cost is $12 per unit sold, and the company paid a $20,000 dividend in February.

The company has an open line of credit with a bank and can borrow at an annual rate of 12%.
For simplification assume that all loans are made at the beginning of the month when borrowing is needed, and repayments are made at the end of a month if there is enough cash to make the payment. Also, interest associated with a loan is only paid at the time when that loan or a portion thereof is paid. Additionally, all loans and repayments (not the interest portion) can only be made in increments of $1000 and the company would like to pay its debts, or a portion thereof, as soon as it has enough cash to do so.

4. Prepare the Budgeted Income Statement based on the information given above.

5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions:

	Ending Inventory
B.	90%
C.	5%

Answer 1

1)

Sales Budget In $
Particualrs	Jan	Feb	Mar	Total
Sales Unit (A)	70000	100000	60000	230000
Sales Price (B)	50	50	50	50
Total Sales (A*B)	3500000	5000000	3000000	11500000

2)

Purchase Budget
Particulars	Jan	Feb	Mar	Total
Sales Unit (A)	70000	100000	60000	230000
Ending Inventory (B) 45 % of next month sale	45000	27000	45000	117000
Opening Inventory ( C )	31500	45000	27000	103500
Units Purchased (D)=A+B-C	83500	82000	78000	243500
Purchase Price ( E )	35	35	35	35
Total Purchase D*E	2922500	2870000	2730000	8522500

3)

Cash Budget
Particulars	Jan	Feb	Mar	Total
Opening Balance of Cash (A)	70000	70000	70000	210000
Cash Collection from Sale
a) 45% of current Month Sale	1575000	2250000	1350000	5175000
b) 55% of Previous month sale	1375000	1925000	2750000	6050000
Total Cash Received (B)	2950000	4175000	4100000	11225000
Payment
Purchases of Previous Month	2065000	2922500	2870000	7857500
Rent	35000	35000	35000	105000
Advertising	24000	24000	24000	72000
Variable and selling& administration	840000	1200000	720000	2760000
Dividend	0	20000	0	20000
Total Cash Paid (C)	2964000	4201500	3649000	10814500
Excess/Shortfall (D)= A+B-C	56000	43500	521000	620500
Borrowing F = E - D	14000	26500	0	40500
Repayment	0	0	-40000	-40000
Interest	0	0	-540	-540
Closing Balance of cash ( E )	70000	70000	479960	619960

Notes ; Payment for purchase of Jan = Purchase of dec , Opening stock is 45% of the current month sales

Purchase Budget
Particualrs	dec
Sales Unit (A)	50000
Ending Inventory (B) 45 % of next month sale	31500
Opening Inventory ( C )	22500
Units Purchased (D)=A+B-C	59000
Purchase Price ( E )	35
Total Purchase D*E	2065000

Interest calculation
	Jan	Feb	March	Total
Borrowings    (X)	14000	26500	0	40500
no of month outstanding till payment (Y)	2	1	0
Rate of Interest   (Z)	0.12	0.12	0
Interest X*Y*Z/12	280	265	0	545

Notes: the amount repaid Is in multiple of 1000 i.e = 26000 +14000 =40000

4)

Budgeted Income statement
Particulars	Jan	Feb	March	Total
Sales	3500000	5000000	3000000	11500000
Less: Direct Material	2922500	2870000	2730000	8522500
Rent	35000	35000	35000	105000
Advertising	24000	24000	24000	72000
Variable and selling& administration	840000	1200000	720000	2760000
Depreciation	66000	66000	66000	198000
Interest	0	0	540	540
Net Income/(Loss)	-387500	805000	-575540	-158040

5) A ) If ending Inventory is 90%

Purchase Budget
Particulars	Jan	Feb	Mar	Total
Sales Unit (A)	70000	100000	60000	230000
Ending Inventory (B) 90 % of next month sale	90000	54000	90000	234000
Opening Inventory ( C )	63000	90000	54000	207000
Units Purchased (D)=A+B-C	97000	64000	96000	257000
Purchase Price ( E )	35	35	35	35
Total Purchase D*E	3395000	2240000	3360000	8995000

Budgeted Income statement
Particulars	Jan	Feb	March	Total
Sales	3500000	5000000	3000000	11500000
Less: Direct Material	3395000	2240000	3360000	8995000
Rent	35000	35000	35000	105000
Advertising	24000	24000	24000	72000
Variable and selling& administration	840000	1200000	720000	2760000
Depreciation	66000	66000	66000	198000
Interest	0	0	11570	11570
Net Income/(Loss)	-860000	1435000	-1216570	-641570

Interest calculation
	Jan	Feb	March	Total
Borrowings    (X)	329000	499000	0	828000
no of month outstanding till payment (Y)	2	1
Rate of Interest   (Z)	0.12	0.12
Interest X*Y*Z/12	6580	4990		11570

B) If Ending inventory is 5%

Purchase Budget
Particulars	Jan	Feb	Mar	Total
Sales Unit (A)	70000	100000	60000	230000
Ending Inventory (B) 5 % of next month sale	5000	3000	5000	13000
Opening Inventory ( C )	3500	5000	3000	11500
Units Purchased (D)=A+B-C	71500	98000	62000	231500
Purchase Price ( E )	35	35	35	ekkarill92 Next > < Previous Related Solutions Prepare a sales budget for the first quarter (Q1) and the first quarter in total. The... Prepare a sales budget for the first quarter (Q1) and the first quarter in total. The selling price per unit is $50.00. December of the previous year    10,000 January                                     70,000 February                                    30,000 March                                        50,000 April                                          80,000 Past experience shows that 45% of sales are collected in the month of the sale, and 55% in the month following the sale.                           2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only... can you please solve #4 Prepare a sales budget for the first quarter (Q1) and the... can you please solve #4 Prepare a sales budget for the first quarter (Q1) and the first quarter in total. The selling price per unit is $50.00. December of the previous year    10,000 January                                     70,000 February                                     30,000 March                                        50,000 April                                          80,000 Past experience shows that 45% of sales are collected in the month of the sale, and 55% in the month following the sale.                           2. Prepare a purchases budget for January through March, and the first quarter in... For the first quarter of 2017, do the following. (a) Prepare a sales budget. This is... For the first quarter of 2017, do the following. (a) Prepare a sales budget. This is similar to Illustration 21-3 on page 1088 of your textbook. (b) Prepare a production budget. This is similar to Illustration 21-5 on page 1089 of your textbook. (c) Prepare a direct materials budget. (Round to nearest dollar) This is similar to Illustration 21-7 on page 1091 of your textbook. (d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) This is... Sosa Company has provided the following budget information for the first quarter of 2016 Total sales... Sosa Company has provided the following budget information for the first quarter of 2016 Total sales $297,500 Budgeted purchases of direct materials 39,450 Budgeted direct labor cost 38,880 Budgeted manufacturing overhead costs: Variable manufacturing overhead 3,645 Depreciation 600 Insurance and property taxes 9,120 Budgeted selling and administrative expenses: Salaries expense 5,000 Rent expense 3,000 Insurance expense 1,200 Depreciation expense 100 Supplies expense 2,975 Additional data related to the first quarter of 2016 for Sosa Company: a. Capital expenditures include $36,000...    . Prepare a cash budget for January through March and for the first quarter in...    . Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $70,000, and this was the balance in the cash account on January 1st. Other expenses include $35,000 per month for rent, $24,000 per month for advertising, and $66,000 per month for depreciation. In addition, variable Selling & Administrative cost is $12 per unit sold, and the company paid a $20,000 dividend in February. The company... Question: Prepare the cash disbursement for direct materials budget for the first quarter Budget information below... Question: Prepare the cash disbursement for direct materials budget for the first quarter Budget information below Sweetums Cookies, Inc.: A Master Budget CaseIntroductionYou knew they were good, but you never thought Grandma’s old cookie recipe would bring you this far! It all started about three years ago when you began using your Grandma’s cookie recipe to bake cookies as a little side business. You bake them right in your home and sell them to friends and local stores. Response has... Operating Budget Create an operating budget for the first quarter of a new business. Projected Sales... Operating Budget Create an operating budget for the first quarter of a new business. Projected Sales are: Month #1: $65,000 Month #2: $97,500 Month #3: $130,000 Month #4: $110,500 These sales are based on selling one product with a selling price of $6.50 Create a Production Budget based on Units (not dollars). Desired Finished Goods Ending Inventory each month is 10% of the next month’s projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the... 1.       Prepare a Sales Budget. Apple is Preparing bugets for the quarter that ends in December... 1.       Prepare a Sales Budget. Apple is Preparing bugets for the quarter that ends in December 31st. Budget Sales of iPhone for the next months are: September 144,000 units October 190,000 units November 260,000 units December 150,000 units January 150,000 units Selling Price is $699 per unit. 2.       The Management of Apple wants ending inventory to be equal to 10,000 sales units. On September 30, 20,000 units were on hand. Prepare a production budget. 3.       Prepare a Direct Material Budget,... Prepare a Sales Budget. Toyota Motor is Preparing bugets for the quarter that ends in December... Prepare a Sales Budget. Toyota Motor is Preparing bugets for the quarter that ends in December 31st. Budget Sales of Yaris Model for the next months are: September       4,000 units October            10,000 units November        6,000 units December         5,000 units January             5,000 units Selling Price is  $16,000 per unit. The Management of Toyota Motor wants ending inventory to be equal to 1,000 sales units. On September 30, 2,000 units were on hand. Prepare a production budget. Prepare a Direct Material Budget, using the amount of $7,000 for... The following is the sales budget for Tesoro Azul, Inc., for the first quarter of 2016:... The following is the sales budget for Tesoro Azul, Inc., for the first quarter of 2016:    January February March Sales budget $142,000 $159,000 $174,000    Credit sales are collected as follows:    70 percent in the month of the sale 25 percent in the month after the sale 5 percent in the second month after the sale    The accounts receivable balance at the end of the previous quarter was $70,150 ($61,200 of which was uncollected December sales).   ... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Subject: Organizaitonal Behavior Question 01: Explain in detail the difference between groups and teams for any... The concept of energy charge is a very useful way to think about how ATP levels... Define white supremacy. Then write about one form of white supremacy that you observe in today’s... QUESTION 01: Define leadership and management QUESTION 02: Discuss some the leadership theories i.e Contingency Theory,... Suppose that the pharmaceutical rm Merck is deciding whether to develop a new diagnostic procedure that... Superheated steam enters a turbine at 3 MPa, 550oC, and exits at 0.01 MPa. a) If... TASK: ( answers should be computerized and in details - please do not copy and paste... ADVERTISEMENT About @ 2020 WizEdu