Required Explain the concept of “master budget” and critically discuss its benefits to an organization. 4.Income tax payments are made by Ivory Garments in the first month of eachquarter based on income for the prior quarter. Ivory's income tax rate is 30%.Ivory's net income for the first quarter of 2022 is projected to be $1,350,000.5.Ivory Garments uses a calendar year reporting period. Ivory Garments, a rapidly expanding garments producer based in Jordan, is in theprocess of formulating plans for 2022. The Director of Marketing has completed his2022 forecast and is confident that sales estimates will be met or exceeded.The following forecasted sales figures show the growth expected and will provide theplanning basis for other corporate departments.SALESSALES$4,600,0005,000,0004,600,0005,400,0006,000,0006,600,000JanuaryFebruaryJulyAugustSeptemberOctoberNovemberDecember$7,000,0007,000,0007,400,0007,400,0007,000,000MarchAprilMayJune7,800,000The Financial Controller of Ivory Garments has been given the responsibility forformulating the cash flow projection, a critical element during a period of rapidexpansion. The following information will be used in preparing the cash analysis:1. Most of the customers of Ivory Garments have a good track record in makingthe payments when due. The company collects 20% of its billings in the monthof the sale, 50% in the month after the sale and 30% in the second month afterthe sale. Uncollectible accounts are insignificant and should not be consideredin the analysis.2. The purchase of fabric is Ivory Garments' largest expenditure; the cost of theseitems equals 50% of sales. The company receives 60% of the fabrics onemonth prior to sale and 40% during the month of sale. Prior experience showsthat accounts payable are paid by Ivory Garments one month after receipt ofthe purchased fabrics.Administrative expenses are projected to be $4,280,000 for 2022. All of theseexpenses are incurred uniformly throughout the year except the property taxeswhich are paid in four equal instalments in the last month of each quarter. Thecomposition of administrative expenses is:Salaries$ 960,000Promotion320,000480,000720,000600,0001,200,000$4,280,000Property taxesInsuranceUtilitiesDepreciationTotal3.

A budget is an estimation of expenses as well as revenues which will be earned and incurred during…

Answered: Explain the concept of “master budget”…

Business

Accounting

Explain the concept of “master budget” and critically discuss its benefits to an organization.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 13P

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