Built-Tight is preparing its master budget for the quarter ended September 30, 2015. Budgeted sales and cash payments for product cost for the quarter follow: July August September Budgeted sales $64,000 $80,000 $48,000 Budgeted cash payments for: Direct materials 16,160 13,440 13,760 Direct labor 4,040 3,360 3,440 Factory overhead 20,200 16,800 17,200 Sales are 20% cash and 80 credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month-end. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month). Required Prepare a cash receipts budget for July, August, and September. Prepare a cash budget for each of the months of July, August, and September. (Round amounts to the dollar).
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.
Built-Tight is preparing its
|
|
July |
August |
September |
|
Budgeted sales |
$64,000 |
$80,000 |
$48,000 |
|
Budgeted cash payments for: |
|
|
|
|
Direct materials |
16,160 |
13,440 |
13,760 |
|
Direct labor |
4,040 |
3,360 |
3,440 |
|
Factory overhead |
20,200 |
16,800 |
17,200 |
|
|
|
|
|
Sales are 20% cash and 80 credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in
Required
-
Prepare a cash receipts budget for July, August, and September.
-
Prepare a
cash budget for each of the months of July, August, and September. (Round amounts to the dollar).
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