The sales budget is provided below for the product of Company ABC. Jan 30,000 units Feb 20,000 units Mar 10,000 units Apr 20,000 units May 30,000 units Finished goods at the end of each month must be 10% of the next month’s budgeted sales. On Dec 31 of the last year, the finished goods totaled 2,000 units. The selling price is $1 per unit. 80% of the credit sales are collected in the month of sale, 15% in the month following sale, and the remainder are uncollectible Prepare a budget showing the required production each month for January, February, March, and the quarter. 2. Prepare the cash collection for each month for January, February, March, and the quarter.
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.
The sales budget is provided below for the product of Company ABC.
|
Jan |
30,000 units |
|
Feb |
20,000 units |
|
Mar |
10,000 units |
|
Apr |
20,000 units |
|
May |
30,000 units |
- Finished goods at the end of each month must be 10% of the next month’s budgeted sales.
- On Dec 31 of the last year, the finished goods totaled 2,000 units.
- The selling price is $1 per unit.
- 80% of the credit sales are collected in the month of sale, 15% in the month following sale, and the remainder are uncollectible
- Prepare a budget showing the required production each month for January, February, March, and the quarter.
2. Prepare the cash collection for each month for January, February, March, and the quarter.
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