Cash $ 85,000 Accounts Receivable 125,600 Finished Goods 69,300 Work in Process 32,500 Materials 48,900 Prepaid Expenses 2,600 Plant and Equipment 325,000 Accumulated Depreciation-Plant and Equipment $156,200 Accounts Payable 62,000 Common Stock, $ 10 par 180,000 Retained Earnings 290,700 $688,900 $688,900 Estimated Costs and Expenses Fixed Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: Direct materials $1.10 Direct labor 0.65 Factory overhead: Depreciation of plant and equipment $40,000 Other factory overhead 12,000 0.40 Selling expenses: Sales salaries and commissions 46,000 0.45 Advertising 64,000 Miscellaneous selling expense 6,000 0.25 Administrative expenses: Office and officers salaries 72,400 0.12 Supplies 5,000 0.10 Miscellaneous administrative 4.000 0.05 expense
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.
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal
year beginning January 1, 20Y4, the following tentative
20Y3, is prepared by the Accounting Department of Regina Soap Co.:
REFER IMAGE
Factory output and sales for 20Y4 are expected to total 200,000 units of product, which are
to be sold at $5.00 per unit. The quantities and costs of the inventories at December 31,
20Y4, are expected to remain unchanged from the balances at the beginning of the year.
Budget estimates of
summarized as follows:
REFER IMAGE
Balances of accounts receivable, prepaid expenses, and accounts payable at the end of
the year are not expected to differ significantly from the beginning balances. Federal
income tax of $30,000 on 20Y4 taxable income will be paid during 20Y4. Regular quarterly
cash dividends of $0.15 per share are expected to be declared and paid in March, June,
September, and December on 18,000 shares of common stock outstanding. It is
anticipated that fixed assets will be purchased for $75,000 cash in May.
Instructions
1. Prepare a budgeted income statement for 20Y4.
2. Prepare a budgeted balance sheet as of December 31, 20Y4, with supporting
calculations.
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