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In: Accounting

Our company sells noserings. Please prepare a master budget for the three-month period ending June 30....

Our company sells noserings.

Please prepare a master budget for the three-month period ending June 30. Include the following detailed budgets (by month and in total):

    • Sales budget
    • Schedule of expected cash collections from sales
    • Purchases budget (in units and in dollars)
    • Expected cash disbursements for merchandise purchases
  • Sales price of product = $10/unit
  • Actual Sales are as follows:
    • January $20,000
    • February $26,000
    • March $40,000
  • Budgeted sales:
    • September $25,000
    • August $28,000
    • July $30,000
    • June $50,000
    • May $100,000
    • April $65,000
  • We maintain enough inventory on hand to cover 40% of the next month's sales.
  • We pay suppliers $4/unit. We pay our supplier 50% of what we purchase in the month of the purchase and 50% in the following month.
  • With regard to sales to customers (all sales are on credit), cash from sales is collected as follows:
    • 20% in the month of the sale
    • 70% in the month following the sale
    • 10% in the second month following the sale.
  • Costs:
    • Sales commissions is 4%.
    • Fixed costs: 1) Advertising $14,000, 2) Rent $3,000, 3) Salaries $106,000, 4) Utilities $200,000, 5) Rent $18,000, 6) Insurance $7,000

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Note: For your better understanding Jan, Feb, Mar are shown.


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