I need question 3 please 183:29 1Chapter 8Have BIS stahten" the budget slightly whenever a depan.... a given month; this was done to .einforce the plant manager's desire to reduceng plant manager often stressed the importance of continued progress toward attaining theget; he also made it known that he kept a file of these performance reports for future reference whenhe succeeded his father.The company controller wament attained introller w..On with Jim Morris continued as followeu to meet the budget, and the minute we do soEmory: I really don't understand wthey tighten is.twork any faster and still maintain quality. I think my men are ready toBesides, those reports don't tell the whole story. We always seem to be interrupting thement time is killing us. Andaonth, your peoplequite frankly, Jim, you were no help. When our hydraulic press broke dowwere nowhere to be found. We had to take it apart ourselMorris: I'm sorry about that, Tom, hottoo. We were runninnmachine -y uepartment has had trouble making budget,at the time of that problem, and if we'd spent a day on that oldnever have made it up. Instead we made the scheduled inspections of the forkliftecause we knew we could do those in less than the budgeted time.1-arv: Well, Jim, at least you have some options. I'm locked into what the scheduling department assigns towhy didn't your...ng in Bill's department?yet. We charged the maximum we could to other workreport show all the on.-Morrand hported some of it yet.ry: Well, I'm glad you have a way of gettingout of the pressure. The accountants seem to knowI do. I thought all that budgetg Mult was sunnosed to halm is liste all a big pain. I'mwwwk, uney re trying to save pennies.uck with all that idle time."Required:1. Identify theat annear toManufacturing Company's budgetarycont2. Explain how Ferguson & Son Manufacturing Company's budgetary control system could be revisedto improve its effectiveness.(CMA, adapted)CASE LO8-2, LO8-4, LO8-8, LO8-9, LO8-10You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings tovarious retail outlets located in shopping malls across the cou ary. In the past, the company has done verylittle in the way of budgeting and at certain times of the year has experienced a shortage of cash. Sinceyou are well trained in budgeting, you have decided to prepare a master budget for the upcoming secondquarter. To this end, you have worked with accounting and other areas to gather the information assembledbelow.January (actual)February (actual)The company sells many styles of earrings, but all are sold for the same price-$10 per pair. Actualsales of earrings for the last three months and budgeted sales for the next six months follow (in pairs ofearrings):March (actual)April (budget).May (budget)June (budget)20,00026,000 July (budget)40,000 August (budget)65,000 September (budget).100,000Send a chat50,00030,00028,00025,000The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should beon hand at the end of each month to supply 40% of the earrings sold in the following month.Suppliers are paid $4 for a pair of earrings. One-half of a month's purchases is paid for in the month ofpurchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month'ssales are collected in the month of sale. An additional 70% is collected in the following month, and theremaining 10% is collected in the second month following sale. Bad debts have been negligible. 3:29 1Monthly operating expenses for the company are given below:4.Variable:Sales commissionsAccounts payable....Dividends payableFixed:AdvertisingRent.......SalariesOUtilities.......InsuranceDepreciationInventoryPrepaid insuranceProperty and equipment (net)Total assets.C.Insurance is paid on an annual basis, in November of each year.The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,000 each quar-ter, payable in the first month of the following quarter.The company's balance sheet as of March 31 is given below:AssetsCashAccounts receivable ($26.000 February sales; $320,000 March sales)calenLiabilities and Stockholders' EquityCommon stockRetained earnings.....Total liabilities and stockholders' equity1. A sales budget, by month and in total.b.Master Budgeting4% of sales$200,000$18,000$106.000$7,000$3,000$14,000The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginningof a month; any repayments are made at the end of a month.The company has an agreement with a bank that allows the company to borrow in increments of$1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicitywe will assume that interest is not compounded. At the end of the quarter, the company would pay the bankall of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000),while still retaining at least $50,000 in cash.Required:Prepare a master budget for the three-month period ending June 30. Include the following detailedschedules:Send a chat$ 74,000346,000104,00021,000950.000$1,495,000A schA schedule of expected cash collections, by month and in total.A merchandise purchases budget in units and in dollars. Show the budget by month and in total.A schedule of expected cash disbursements for merchandise purchases, by month and in total.2A cash budget. Show the budget by month and in total. Determine any borrowing that would beneeded to maintain the minimum cash balance of $50,000.3.A budgeted income statement for the three-month period ending June 30. Use the contributionapproach.A budgeted balance sheet as of June 30.$ 100,00015,000800,000580,000$1,495,00038

Budgeting - Budgeting is a method of creating an estimation for the later periods. This includes…

Monthly operating expenses for the company are given below: Variable: Sales commissions Fixed: Advertising Rent.... Salaries Utilities Insurance Depreciation ter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: L. A Assets Insurance is paid on an annual basis, in November of each year. ment The company plans to purchase $16,000 in new equipment during May and $40,000 in new equip company declares dividends of $15,000 each quar Liabilities and Stockholders' Equity Accounts payable.... Dividends payable... Common stock...... Retained earnings. Total liabilities and stockholders' equity 4% of sales Cash Accounts receivable ($26.000 February sales; $320,000 March sales) Inventory Prepaid insurance Property and equipment (net) Total assets Master Budgeting $200,000 $18,000 $106.000 $7,000 $3,000 $14,000 approach. A budgeted balance sheet as of June 30. $ 74,000 346,000 104,000 21,000 950,000 $1,495,000 The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. $ 100,000 15,000 800,000 580,000 $1,495,000 The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $50,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: A sales budget, by month and in total. A schedule of expected cash collections, by month and in total. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. 4.A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the of 1A budgeted income statement for the three-month period ending June 30. Use the contribution