MORGAN Merchandising is preparing its Sales Budget for the 3rd Quarter of 2020 based on a budgeted sales price agreed upon at the beginning of the year. To help in the budget preparation, the following information are given: (a) Budgeted sales revenue for the 1st month of 2020 amounted to #375,000. (b) Budgeted quantities sold for the 1st quarter of 2020 is 4,500 units. (C) It is forecasted that the same quantities will be sold per month of each quarter. (d) It is estimated that quantities sold will increase by 500 units on the first month of each quarter from the quantities sold of the previous month. What is the budgeted sales quantity for the 3rd quarter? 2500 7500 1500 6000

MORGAN Merchandising is preparing its Sales Budget for the 3rd Quarter of 2020 based on a budgeted sales price agreed upon at the beginning of the year. To help in the budget preparation, the following information are given: (a) Budgeted sales revenue for the 1st month of 2020 amounted to #375,000. (b) Budgeted quantities sold for the 1st quarter of 2020 is 4,500 units. (C) It is forecasted that the same quantities will be sold per month of each quarter. (d) It is estimated that quantities sold will increase by 500 units on the first month of each quarter from the quantities sold of the previous month. What is the budgeted sales quantity for the 3rd quarter? 2500 7500 1500 6000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
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