MPQ Corporation is in the process of assembling its budget for the quarter ending March 31. Please see the following sales data:
Accounts Receivable, December 31 is $14,000. The $14,000 represents the uncollected portion of December sales.
The company prefers inventory equal to 27% of the net month’s sales in units. The December 31 balance of inventory is 480 units. The cost of inventory is $12 per unit. 35% of the purchases are paid in the month of purchase and 57% are paid in the subsequent month. At December 31, the Accounts Payable balance is $6,800. The $6,800 represents the purchases unpaid in December.
Miscellaneous Expenses are paid within the month incurred. These expenses consist of the following:
Please review the additional data below:
Instructions
Prepare a master budget for each of the first three months during the calendar fiscal year. The master budget will include the following:
Sales Budget | |||||
Budgeted Unit Sales | Budgeted Unit Price | Budgeted Total Dollars | |||
January | 1,650 | $28.00 | 46,200 | ||
February | 1,400 | 28 | 39,200 | ||
March | 1,550 | 28 | 43,400 | ||
Totals for the quarter | 4600 | 28 | 128,800 | ||
Production budget. | |||||
Production Budget | |||||
Jan | Feb | Mar | Total | ||
Net month's budgeted sales (units) | 1,650 | 1,400 | 1,550 | ||
Ratio of inventory to future sales | 27% | 27% | 27% | ||
Budgeted ending inventory (units) | 446 | 378 | 419 | 419 | |
Budgeted units sales for month | 1,650 | 1,400 | 1,550 | 4,600 | |
Required units of available production | 2,096 | 1,778 | 1,969 | 5,019 | |
Beginning inventory (units) | 480 | 446 | 378 | 480 | |
Units to be produced | 1,616 | 1,333 | 1,591 | 4,539 | |
Material price per unit | $12 | $12 | $12 | $12 | |
Total cost of direct material purchases | $19,386 | $15,990 | $19,086 | $54,462 | |
Schedule Cash Selling & Administartive Expense Budget | |||||
Jan | Feb | Mar | Total | ||
Budgeted sales | $46,200 | $39,200 | $43,400 | ||
Sales commission percent | 8% | 8% | 8% | ||
Sales commissions | $3,696 | $3,136 | $3,472 | 10304 | |
Freight 3% | $1,386 | $1,176 | $1,302 | $3,864 | |
Lease on Factory | $3,750 | $3,750 | $3,750 | 11250 | |
Office salaries | 2,200 | 2200 | 2200 | 6600 | |
Cash selling and administrative expenses | $11,032 | $10,262 | $10,724 | $32,018 | |
Cash budget. | |||||
Calculation of Cash receipts from customers: | |||||
Jan | Feb | Mar | Total | ||
Total budgeted sales | $46,200 | $39,200 | $43,400 | ||
Cash sales | 30% | 13,860 | 11,760 | 13,020 | 38,640 |
Sales on credit | 70% | $32,340 | $27,440 | $30,380 | |
Total cash receipts from customers | |||||
Jan | Feb | Mar | Total | ||
Current month's cash sales | $13,860 | $11,760 | $13,020 | 38,640 | |
Collections of receivables | 14,000 | 32,340 | 27,440 | 73,780 | |
Total cash receipts | 27860 | 44100 | 40460 | 112,420 | |
Cash disbursement of Inventory | |||||
For Accounts payable | 6800 | 6,800 | |||
For Jan purcahses | $6,785 | $11,050 | $17,835 | ||
For Feb purchases | $5,597 | $9,114 | $14,711 | ||
For Mar purchases | $6,680 | $6,680 | |||
Total cash payment of purchases | 13585 | 16647 | 15794 | 46026 | |
Cash Budget | |||||
Jan | Feb | Mar | Total | ||
Beginning cash balance | $9,800 | $13,043 | $30,234 | $9,800 | |
Cash receipts from customers | 27,860 | 44,100 | 40,460 | 112,420 | |
Total cash available | 37660 | 57143 | 70694.38 | $122,220 | |
Cash disbursements: | |||||
Payments for raw materials | 13,585 | 16,647 | 15,794 | 46,026 | |
Cash selling and administrative expenses | 11,032 | 10,262 | 10,724 | 32,018 | |
Total cash disbursements | 24617 | 26909 | 26518 | 78,044 | |
Preliminary cash balance | 13,043 | 30,234 | 44,176 | 44,176 | |
Additional loan (loan repayment) | 0 | 0 | |||
Ending cash balance | $13,043 | $30,234 | $44,176 | $44,176 | |
Budgeted Income Statement | |||||
For Three Months Ended March 31 | |||||
Sales | 128,800 | ||||
Less:Cost of good sold | 55200 | ||||
(4600*12) | |||||
Gross profit | 73,600 | ||||
Less | |||||
Selling & administrative expenses | 32018 | ||||
Depreciation expenses | 11550 | ||||
Total selling & administrative expenses | 43568 | ||||
Net Operating Income | 30,032 | ||||
Less: Income tax expenses | 11412 | ||||
Net Income | 18,620 |
If any doubt please comment
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