1. Sales budget Create a sales budget for the 1st quarter that shows expected sales revenue for January, February, and March and total sales revenue for the quarter. Sales in units are expected to be: 9,000 November: March: December: 9,500 11,500 13,500 January: February: 11,000 April: 9,800 May: 12,500 Selling price/unit is expected to be $21/unit. 2. Cash collections budget Cash sales are generally 10% and credit sales are generally 90%. Credit sales are typically collected: 20% in the month of sale, 60% in the following month after the month of sale, 15% 2 months after the month of sale and 5% are never collected. What is the cash collections budget for January, February, and March and for the quarter? 3. Production budget The company plans to have ending inventory each month of 12% of the following month's expected sales. What is the production budget for January, February, and March and for the 1st quarter? 4. DM budget 4.5 pounds of DM is needed per unit at a cost of $3 per pound. Ending inventory of DM should be 18% of next month's production needs. What is the total cost of DM for January, February, and March and for the 1st quarter?
1. Sales budget Create a sales budget for the 1st quarter that shows expected sales revenue for January, February, and March and total sales revenue for the quarter. Sales in units are expected to be: 9,000 November: March: December: 9,500 11,500 13,500 January: February: 11,000 April: 9,800 May: 12,500 Selling price/unit is expected to be $21/unit. 2. Cash collections budget Cash sales are generally 10% and credit sales are generally 90%. Credit sales are typically collected: 20% in the month of sale, 60% in the following month after the month of sale, 15% 2 months after the month of sale and 5% are never collected. What is the cash collections budget for January, February, and March and for the quarter? 3. Production budget The company plans to have ending inventory each month of 12% of the following month's expected sales. What is the production budget for January, February, and March and for the 1st quarter? 4. DM budget 4.5 pounds of DM is needed per unit at a cost of $3 per pound. Ending inventory of DM should be 18% of next month's production needs. What is the total cost of DM for January, February, and March and for the 1st quarter?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Questions 3 and 4 only
Transcribed Image Text:Format all numbers as accounting with the last line of each budget including dollar signs where applicable. Do not
round given numbers but round all answers to the nearest dollar (no decimals). Make the quarterly total for each
budget bold and a larger font. Use at least one color. Add grid lines. Put budgets on one tab in the order below with
the months and quarterly totals lined up.
1. Sales budget
Create a sales budget for the 1st quarter that shows expected sales revenue for
January, February, and March and total sales revenue for the quarter. Sales in units are expected to be:
November:
9,000
March:
December: 9,500
11,500
13,500
January:
February:
11,000
April:
9,800
May:
12,500
Selling price/unit is expected to be $21/unit.
2. Cash collections budget Cash sales are generally 10% and credit sales are generally 90%. Credit sales
are typically collected: 20% in the month of sale, 60% in the following month after the month of sale, 15% 2
months after the month of sale and 5% are never collected. What is the cash collections budget for January,
February, and March and for the quarter?
3. Production budget
The company plans to have ending inventory each month of 12% of the
following month's expected sales. What is the production budget for January, February, and March and for
the 1st quarter?
4. DM budget
4.5 pounds of DM is needed per unit at a cost of $3 per pound. Ending
inventory of DM should be 18% of next month's production needs. What is the total cost of DM for January,
February, and March and for the 1st quarter?
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