Question

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

Answer 1

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