Question A: ABC Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 92 Budgeted unit sales (all on credit): July. . 9,000 August ... 11,300 September. 10,400 October ... 10,800 10,500 November Raw materials requirement per unit of output 4 pounds Raw materials cost $ 1.00 per pound Credit sales are collected: 40% in the month of the sale 60% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 20% of the following month's sales. Some 2000 units of finished goods was brought out from June. The ending raw materials inventory should equal 30% of the following month's raw materials production needs. Some 13,000 pounds of raw materials were brought out from June. At the end of June, accounts payable for raw materials purchases amounted to $8000. Requirement: 1. Prepare a sales budget for the month of July, August and September 2. Prepare a cash collection from sales schedule for the month of July, August and September. 3. Prepare a production budget for the month of July, August and September.
Question A: ABC Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 92 Budgeted unit sales (all on credit): July. . 9,000 August ... 11,300 September. 10,400 October ... 10,800 10,500 November Raw materials requirement per unit of output 4 pounds Raw materials cost $ 1.00 per pound Credit sales are collected: 40% in the month of the sale 60% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 20% of the following month's sales. Some 2000 units of finished goods was brought out from June. The ending raw materials inventory should equal 30% of the following month's raw materials production needs. Some 13,000 pounds of raw materials were brought out from June. At the end of June, accounts payable for raw materials purchases amounted to $8000. Requirement: 1. Prepare a sales budget for the month of July, August and September 2. Prepare a cash collection from sales schedule for the month of July, August and September. 3. Prepare a production budget for the month of July, August and September.
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 3CE: Refer to Cornerstone Exercise 8.2 for the production budgets for practice balls and match balls....
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Concept explainers
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.
Question
Transcribed Image Text:Question A:
ABC Corporation makes one product and has provided the following information to help prepare
the master budget for the next four months of operations:
Budgeted selling price per unit
$ 92
Budgeted unit sales (all on credit):
July. .
August ....
9,000
11,300
September..
10,400
October ...
10,800
10,500
November .
Raw materials requirement per unit of output
4
pounds
Raw materials cost
$ 1.00
per pound
Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. Some
2000 units of finished goods was brought out from June. The ending raw materials inventory
should equal 30% of the following month's raw materials production needs. Some 13,000
pounds of raw materials were brought out from June. At the end of June, accounts payable for
raw materials purchases amounted to $8000.
Requirement:
1. Prepare a sales budget for the month of July, August and September
2. Prepare a cash collection from sales schedule for the month of July, August and September.
3. Prepare a production budget for the month of July, August and September.
4. Prepare raw materials purchase budget for the month of July, August and September
5. The principal purpose of the cash budget is to see how much cash the company will have in
the bank at the end of the year." Do you agree? Explain.
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