Question

please use excel to do it. it also need to come with formula. formula is very important. many many thanks.

1. Prepare a sales budget for January through March and for the Quarter in total. The selling price per unit is $50.00.

December of the previous year           20,000

January                                     100,000

February                                   80,000

March                                       60,000

April                                         40,000

                         

2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through March and for 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 quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 50% of next month’s projected sales.

3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $70,000.00, and this was the balance in the cash account on January 1. Past experience shows that 40% of sales are collected in the month of the sale, and 60% in the month following the sale. Selling cost is $12 per unit sold. Other expenses include $35,000 per month for rent, $104,000 for advertising, and $76,000 per month for depreciation. All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases of inventory are paid 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 a borrowing need is identified 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 is paid (i.e. a loan is only paid if there is enough cash to pay off the whole loan, any interest associated with it and still have enough cash left over for the minimum cash balance.)

Answer 1

1.sales budget

sales budget
particulars	january	february	march	total
estimated sales in units(a)	100000	80000	60000	240000
selling price per unit(b)	$50	$50	$50	$50
total sales(c=axb)	$5,000,000	$4,000,000	$3,000,000

2. purchase budget

purchase budget
particulars	january	february	march	total
estimated material required	100000	80000	60000	240000
add:desired closing stock(50%)	40000	30000	20000	90000
total required	140000	110000	80000	330000
less:opening stock available	50000	40000	30000	120000
material to be purchased	90000	70000	50000	210000
purchase cost per unit	$35	$35	$35	$35
total material purchase cost	$3,150,000	$2,450,000	$1,750,000	$7,350,000

schedule for payment for purchase

schedule for payment of purchase costs
particulars	decemebr	january	february	march	total
estimated material required	20000	100000	80000	60000	240000
add:desired closing stock(50%)	50000	40000	30000	20000	90000
total required	70000	140000	110000	80000	330000
less:opening stock available	10000	50000	40000	30000	120000
material to be purchased	60000	90000	70000	50000	210000
purchase cost per unit	$35	$35	$35	$35	$35
total material purchase cost	$2,100,000	$3,150,000	$2,450,000	$1,750,000	$7,350,000
payment(1 month in arrear)		$2,100,000	$3,150,000	$2,450,000	$7,700,000

3.cash budget

cash budget(in $)
particulars	january	february	march	total
cash balance at the beginning	70000	70000	421000
cash inflows:-
40% in the month of sale	2000000	1600000	1200000
60% in following month	600000	3000000	2400000
total cash inflows	2600000	4600000	3600000
cash outflows:-
selling expenses	1200000	960000	720000
rent	35000	35000	35000
advertising	104000	104000	104000
material purchase	2100000	3150000	2450000
cash balance at the end	70000	70000	70000
total cash required	3509000	4319000	3379000
cash surplus/(deficit)	-839000	351000	642000
loan borrowed/(repaid)	839000