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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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- Professional foes earned budget for a service company LundquistFret well. CPAs, offer three types of services to clents: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending May 31. 20Y8: The average billing rate for staff is 140 per hour, and the average billing rate for partners is 450 per hour. Prepare a professional fees earned budget for Lundquist Fretwell, CPAs, for theyear ending May 31, 20Y8, using the following column headings and showing the estimated professional fees by type of service rendered:Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent 12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of 42,000, marketable securities of 25,000, and accounts receivable of 198,000 (150,000 from May sales and 48,000 from April sales). Sales on account in April and May were 120,000 and 150,000, respectively. Current liabilities as of June 1 include 13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 24,000 will be made in July. Mercury Shoes regular quarterly dividend of 15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of 40,000. Instructions Prepare a monthly cash budget and supporting schedules for June, July, and August. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
- Assignment Four A manager is preparing a revenue budget for next month. The following is the manager's current month actual operating results. ACTUAL OPERATING RESULTS CURRENT MONTH Revenue Source Number of Guests Restaurant Lounge Banquet room Total NEXT MONTH BUDGET Revenue Source 3492 515 388 4395 Restaurant Lounge Banquet room Total Average Sale per Guest Number of Guests $20.50 $12.00 $28.50 $20.21 Create the revenue forecast for next month based on the following assumptions. A. Restaurant guest counts will be 3,600 with an average sale per guest of $21.00. B. Lounge guests to be served are estimated at 525 with a 10 percent increase in average sale per guest. C. The banquet room will serve 425 customers and generate $12,750 in sales. Sales Average Sale per Guest $71,586 $6,180 $11,058 $88,824 Sales 1. What will be the manager's revenue forecast for next month? 2. What will be the manager's average sale per guest forecast for next month? 3. What is the overall percentage increase…Question 2 A manager is preparing a revenue budget for next month. The following is the manager's current month actual operating results. ACTUAL OPERATING RESULTS CURRENT MONTH Number of Guests Revenue Source Average Sale per Sales Guest Restaurant 3492 $20.50 $71,586 Lounge 515 $12.00 $ 6,180 Banquet room 388 $28.50 $11,058 4395 $20.21 $88,824 Total Create the revenue forecast for next month based on the following assumptions. A. Restaurant guest counts will be 3,600 with an average sale per guest of $21.00. B. Lounge guests to be served are estimated at 525 with a 10 percent increase in average sale per guest. C. The banquet room will serve 425 customers and generate $12,750 in sales.Problem 1 The marketing department of New Generation Hotel is preparing its revenue budget for the year 20X2. The Hotel has 200 rooms and operates 365 days a year. For 20X1, the average room rate and the occupancy percentage were $150 and 80% respectively. The company's accountant has prepared the following forecast information for the year 20X1 in October 20X1 by incorporating 9 months actual and 3 months forecast. REVENUE Rooms Food & Beverage Spa TOTAL REVENUE 20X1 $8,760,000 $5,256,000 $876,000 $14,892,000 The following information relating to 20X2 has also been gathered: i. The management would like to increase the average room rate to $160 to cover rising costs, as a result of the higher room rate; occupancy is expected to drop to 78%. ii. Food & Beverage revenue varies with room night, the average Food & Beverage revenue is expected to be $90 per room night. iii. Spa revenue will go up to $903,670 because of price increases. Required: Based on the above information, prepare the…
- PROBLEM Filling in for his supervisor, who suddenly left the company, Harvey quickly evaluated the situation to wrap up his department's production budget. The department currently holds enough inventory to be in compliance with its standard which is based on the following month's budgeted sales. From the sales and previous budgets, he learned the budgeted unit sales for the next 4 months and the standard for holding inventory at month end which are both presented here. Unit sales per month Month 1 Month 2 Month 3 Month 4 Ending inventory standard Materials held at month end 5,000 4,500 6,000 6,500 10% Required: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated. Show the production budget that Harvey would assemble for the next quarter. Budgeted sales volume Target ending FG Inventory Total units needed Beginning FG Inventory Budgeted units to be produced…Problem 2. Tyrion Company has the following budgeted production for the 2nd quarter ending in June 30. April May June Quarter Budgeted Production 40,000 50,000 60,000 150,000 Each unit requires 3 pounds of raw material that costs $5.00 per pound. Management desires to end each month with an inventory of raw materials equal to 20% of the following month's production needs. The desired ending inventory for June is 40,000 pounds. Management plans to pay for 60% of raw material purchases in the month acquired and 40% in the following month. In addition, the beginning raw materials inventory for April is budgeted to be 24,000 pounds and the beginning accounts payable for the April is budgeted to be $50,820. Required: a. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the 2nd quarter ending in June. b. If the actual cost of material purchased is $4.5 per pound and 4 pounds of raw materials were purchased to manufacture…Problem 01:4 ZYX has total sales for June and July of $30,000 and $25,000, respectively. Cash sales are normally 40% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 50% are collected during the first month after the sale, and the remaining 10% are collected in the second month. Determine the amount of accounts receivable reported on the company's budgeted balance sheet as of July 31.
- Problem 1 As treasurer of a manufacturing company, you are preparing a cash budget for September of the next fiscal year. The information for September you have, at your disposal to complete this task is as follows: (а) Next year's sales forecast follows: July August September October $350,000 $240,000 $300,000 $360,000 (b) The sales price is $60. (c) Each month, 20% of the sales are for cash and 80% are on credit. (d) The AR collection pattern for credit sales is: 20% is received in 0-30 days 50% is received in 31-60 days 30% is received in 60-90 days (e) The cash in bank at the beginning of September is $15,400 (f) The per unit production cost data is: Direct material $20 Direct labor 1 direct labor hour per unit; $15 direct labor rate The company monthly beginning FG inventory policy is to maintain a minimum of 25% of the current month's sales. (g) (h) The AP pattern for credit purchases is: 30% is paid in 0-30 days 70% is paid in 31-60 days (i) There is a income tax payment of…Problem 1 The marketing department of New Generation Hotel is preparing its revenue budget for the year 20X2. The Hotel has 200 rooms and operates 365 days a year. For 20X1, the average room rate and the occupancy percentage were $150 and 80% respectively. The company's accountant has prepared the following forecast information for the year 20X1 in October 20X1 by incorporating 9 months actual and 3 months forecast. REVENUE Rooms Food & Beverage Spa TOTAL REVENUE 20X1 $8,760,000 $5,256,000 $876,000 $14,892,000 The following information relating to 20X2 has also been gathered: i. The management would like to increase the average room rate to $160 to cover rising costs, as a result of the higher room rate; occupancy is expected to drop to 78%. ii. Food & Beverage revenue varies with room night, the average Food & Beverage revenue is expected to be $90 per room night. iii. Spa revenue will go up to $903,670 because of price increases. Required: Based on the above information, prepare the…Task 1 Pedro Sdn Bhd. manufactures and sells two cookware products in a single plant. The new manager wants to have quarterly budgets and has prepared the following information for the first quarter of 2021. The following information is available: Budgeted sales: Product A …….60,000 units @RM100 each Product B …….40,000 units @RM125 each Budgeted inventories: Beginning Ending Product A Product B Direct material (Metal) Direct material (Plastic) Direct material (Handles) 20,000 8,000 32,000 kg 29,000 kg 6,000 units 25,000 10,000 36,000 kg 32,000 kg 7,000 units Standard variable costs: Product A Product B Direct materials: Metal Plastic Handles Total materials 5kg @RM8.00 3kg@RM5.00 1 unit @RM3.00 RM40.00 15.00 3.00 58.00 4kg @RM8.00 3kg@RM5.00 RM32.00 15.00 47.00 Direct labour Variable manufacturing overhead Total 2hours@RM12.00 2hours@RM1.50 24.00 3.00 85.00 3hours@RM16.00 3hours@RM1.50 48.00 4.50…