You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributer of a designer's silk ties. The company has an extensive franchise in the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make favorable impression on the president and have assembled the information below. The company desires to maintain a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $9.00 each. Recent and forecasted sales in units are as follows: Month January Actual February Actual March Actual April May Units 20,000 24,000 28,000 35,000 42,500 Variable: Sales Commissions Fixed: Wages and Salaries Utilities Insurance Depreciation Miscellaneous Month June July August September October The large buildup in sales before and during June is due to Father's Day. Ending inventories are supposed to equal 90% of the next month's sales in units. The ties cost the company $5 each. Purchases are paid for as follows: 55% in the month of purchase and the remaining 45% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 30% of a month's sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 20% is collected in the second month following sale. Bad debts have been negligible The company's monthly selling and administrative expenses are given below: $30,000 $14,000 $1,200 $1,500 $ 4,000 Units 60,000 40,000 $1.00 for each unit (tie) sold 35,000 30,000 30,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. New fixtures will be purchased during May for $52,000 cash. The
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.
Please show how to do this in Excell. Thank you.
![You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributer of
a designer's silk ties. The company has an extensive franchise in the distribution of the ties, and sales
have grown so rapidly over the last few years that it has become necessary to add new members to the
management team. You have been given responsibility for all planning and budgeting. Your first
assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to
make favorable impression on the president and have assembled the information below.
The company desires to maintain a minimum ending cash balance each month of $10,000. The ties are
sold to retailers for $9.00 each. Recent and forecasted sales in units are as follows:
Month
January Actual
February Actual
March Actual
April
May
Units
Variable:
Sales Commissions
20,000
24,000
Fixed:
Wages and Salaries
Utilities
Insurance
Depreciation
Miscellaneous
28,000
35,000
42,500
Month
The large buildup in sales before and during June is due to Father's Day. Ending inventories are
supposed to equal 90% of the next month's sales in units. The ties cost the company $5 each.
Purchases are paid for as follows: 55% in the month of purchase and the remaining 45% in the following
month.
June
All sales are on credit, with no discount, and payable within 15 days. The company has found, however,
that only 30% of a month's sales are collected by month-end. An additional 50% is collected in the
following month, and the remaining 20% is collected in the second month following sale. Bad debts have
been negligible
The company's monthly selling and administrative expenses are given below:
$30,000
$14,000
July
August
September
October
$ 1,200
$1,500
$ 4,000
$1.00 for each unit (tie) sold
Units
60,000
40,000
35,000
30,000
30,000
All selling and administrative expenses are paid during the month, in cash, with the exception of
depreciation and insurance expired. New fixtures will be purchased during May for $52,000 cash. The](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb73a2160-b234-4191-b817-28b9e39bc8de%2F0955ce7c-ae60-4694-83b2-71531463058f%2Fx8rrf3_processed.png&w=3840&q=75)
![company declares dividends of $15,000 per quarter, payable in the first month following quarter end. The
company follows calendar quarters.
The company has an agreement with a bank that allows it to borrow in increments of $1,000 at the
beginning of each month, up to a total loan balance of $150,000. The interest rate on these loans is 12%
per annum, and for simplicity, we will assume that interest is not compounded. On the last day of each
calendar quarter, the company must 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 $10,000 in cash.
The company's balance sheet at March 31" is shown below:
Accounts receivable.
Inventory.
Prepaid insurance
Fixed assets, net of depreciation
Total Assets......
Liabilities and Stockholders' Equity
Accounts payable..
Dividends payable..
Capital stock
Retained camnings..
Total abilities and stockholders' equity.
$14,100
219,600
-157.500
14,400
..169,000
-$574,600
$77,175
12,000
300,000
185.425
$574,609
Required:
Prepare a master budget for the three-month period ending June 30th. Include the following detailed
budgets/schedules:
1) A. Sales budget by Month with a total for the period.
B. Schedule of expected cash collections from sales, by month and a total for the quarter.
C. Merchandise purchases budget in units and in dollars. Show the budget by month and in total.
D. Schedule of expected cash disbursements for merchandise purchases, by month and in total.
2) A cash budget, show the budget by month and in total for the quarter.
Your master budget must be prepared in Excel. Please use a separate tab for each required budget
listed above. However, you may choose to combine requirements 1C and 1D into single tab within your
Excel workbook. Your submission to Canvas should be a single self-contained Excel workbook using
formulas and references cells between workbook tabs professionally present with formatting, correct
spelling, etc. You may include additional tabs / schedules beyond the items listed in the requirements as
appropriate.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb73a2160-b234-4191-b817-28b9e39bc8de%2F0955ce7c-ae60-4694-83b2-71531463058f%2F9a10ve6_processed.png&w=3840&q=75)
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