Master Budget Project Okay Company is preparing to build its master budget. The budget will detail...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Master Budget Project Okay Company is preparing to build its master budget. The budget will detail each quarter's activity and the activity for the year in total. The master budget will be based on the following information: a. This will be the first year of operation for Okay Company. b. Budgeted unit sales by quarter for 2018 are projected as follows: First quarter 6,500, Second quarter 6,000, Third quarter 6,100 & Fourth quarter 6,250. c. The selling price is $50 per unit. Sales are estimated to be collected 70% in cash and 30% credit. d. Of the credit sales, 80% are estimated to be collected in the quarter of the sale and the remaining 20% is collected in the quarter following the sale. e. Okay's past experience indicates that cost of goods sold is about 60 percent of sales. f. Since this is the first year of operations there is no beginning inventory at the beginning of the year. Okay's ending inventory policy is 40% of the following quarter's inventory needs. Desired ending inventory for 4th Qtr is $74,000. g. Okay buys inventory on account. The purchases are paid for in full the quarter following the purchase. h. Selling and administrative expenses total $15,000 per quarter, which includes $2,500 depreciation. All selling and administrative expenses requiring cash payments are paid for in the month incurred. Required: Prepare the following budgets for Okay Company for all 4 quarters and yearly total: 1. Sales budget 2. Sales Type 3. Cash Collections of Sales 4. Inventory purchases budget 5. Cash Payments of Inventory 6. Selling and Administrative expenses budget 7. Cash Payments of Selling and Administrative expenses 8. Cash budget Requirement #1 Unit sales X Selling Price Total Sales Revenue Requirement #2 Cash sales Credit Sales Total Sales Revenue Sales Budget Quarter 1 Quarter 2 Quarter 3 Type of Sale Quarter 1 Quarter 2 Quarter 3 Requirement #3 Cash Collections from Sales to be used in the Cas Quarter 1 Quarter 2 Quarter 3 Cash Collections from Cash Sales Cash Collections from 1st Qtr Credit Sales Cash Collections from 2nd Qtr Credit Sales Cash Collections from 3rd Qtr Credit Sales Cash Collections from 4th Qtr Credit Sales Total Cash Collections from Sales Requirement #4 Quarter 1 Inventory Purchases Budget Quarter 2 Quarter 3 Total Sales Revenue X CGS % CGS Plus: Desired ending inventory Less: Beginning inventory TOTAL Quantity of Inventory to purchase Requirement #5 Cash Payments for Inventory Purchases to be used in t Total Cash Payments for DM Purchases Quarter 1 Requirement #6 Quarter 1 Total S&A exp. Budget Requirement #7 Quarter 2 Quarter 3 Selling and Administrative Expense Budg Quarter 2 Quarter 3 Cash payments of Selling and Administrative Expenses to be u Total S&A exp. Less: Op. Exp. Deprec. (non-cash item) Total Op. Exp. paid for in Cash Requirement #8 Beg. Cash Plus: Collections from Sales Less: Inventory Payments Less: Payments for S&A Expenses Ending Cash Quarter 1 Quarter 2 Quarter 3 Cash Budget Quarter 1 Quarter 2 Quarter 3 $ Quarter 4 Total Quarter 4 Total h Budget Quarter 4 Total $ Quarter 4 Total 74,000.00 $ 74,000.00 he Cash Budget $ Quarter 4 Total et Quarter 4 Total sed in the Cash Budget Quarter 4 Total Quarter 4 Total Master Budget Project Okay Company is preparing to build its master budget. The budget will detail each quarter's activity and the activity for the year in total. The master budget will be based on the following information: a. This will be the first year of operation for Okay Company. b. Budgeted unit sales by quarter for 2018 are projected as follows: First quarter 6,500, Second quarter 6,000, Third quarter 6,100 & Fourth quarter 6,250. c. The selling price is $50 per unit. Sales are estimated to be collected 70% in cash and 30% credit. d. Of the credit sales, 80% are estimated to be collected in the quarter of the sale and the remaining 20% is collected in the quarter following the sale. e. Okay's past experience indicates that cost of goods sold is about 60 percent of sales. f. Since this is the first year of operations there is no beginning inventory at the beginning of the year. Okay's ending inventory policy is 40% of the following quarter's inventory needs. Desired ending inventory for 4th Qtr is $74,000. g. Okay buys inventory on account. The purchases are paid for in full the quarter following the purchase. h. Selling and administrative expenses total $15,000 per quarter, which includes $2,500 depreciation. All selling and administrative expenses requiring cash payments are paid for in the month incurred. Required: Prepare the following budgets for Okay Company for all 4 quarters and yearly total: 1. Sales budget 2. Sales Type 3. Cash Collections of Sales 4. Inventory purchases budget 5. Cash Payments of Inventory 6. Selling and Administrative expenses budget 7. Cash Payments of Selling and Administrative expenses 8. Cash budget Requirement #1 Unit sales X Selling Price Total Sales Revenue Requirement #2 Cash sales Credit Sales Total Sales Revenue Sales Budget Quarter 1 Quarter 2 Quarter 3 Type of Sale Quarter 1 Quarter 2 Quarter 3 Requirement #3 Cash Collections from Sales to be used in the Cas Quarter 1 Quarter 2 Quarter 3 Cash Collections from Cash Sales Cash Collections from 1st Qtr Credit Sales Cash Collections from 2nd Qtr Credit Sales Cash Collections from 3rd Qtr Credit Sales Cash Collections from 4th Qtr Credit Sales Total Cash Collections from Sales Requirement #4 Quarter 1 Inventory Purchases Budget Quarter 2 Quarter 3 Total Sales Revenue X CGS % CGS Plus: Desired ending inventory Less: Beginning inventory TOTAL Quantity of Inventory to purchase Requirement #5 Cash Payments for Inventory Purchases to be used in t Total Cash Payments for DM Purchases Quarter 1 Requirement #6 Quarter 1 Total S&A exp. Budget Requirement #7 Quarter 2 Quarter 3 Selling and Administrative Expense Budg Quarter 2 Quarter 3 Cash payments of Selling and Administrative Expenses to be u Total S&A exp. Less: Op. Exp. Deprec. (non-cash item) Total Op. Exp. paid for in Cash Requirement #8 Beg. Cash Plus: Collections from Sales Less: Inventory Payments Less: Payments for S&A Expenses Ending Cash Quarter 1 Quarter 2 Quarter 3 Cash Budget Quarter 1 Quarter 2 Quarter 3 $ Quarter 4 Total Quarter 4 Total h Budget Quarter 4 Total $ Quarter 4 Total 74,000.00 $ 74,000.00 he Cash Budget $ Quarter 4 Total et Quarter 4 Total sed in the Cash Budget Quarter 4 Total Quarter 4 Total
Expert Answer:
Related Book For
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman
Posted Date:
Students also viewed these finance questions
-
Quaint Stem Company is a high-end glassware manufacturer that produces fine stemware of the highest quality. The company is completing its fourth year of operations and is preparing to build its...
-
Optima Company is a high-technology organization that produces a mass-storage system. The design of Optimas system is unique and represents a breakthrough in the industry. The units Optima produces...
-
Santa's Helpers Ltd estimates its income taxes at 35% of pre-tax income. For the quarter ended September 30, pre-tax income was $200,000. Prepare the journal entry to record the estimated income...
-
The divisions among the four types of financial services (banks, trust companies, insurance companies, investment brokerages) have been relaxed. Now, banks are able to provide all four types of...
-
1. Which of the following is NOT true for antigens? a. An antigen is any agent that can bind specifically to components of the immune system. b. Epitopes are the smallest part of an antigen molecule...
-
What is a simulation?
-
Henri Mikels and Alex Jamison are watch repairmen who want to form a partnership and open a jewelry store. They have an attorney prepare their partnership agreement, which indicates that assets...
-
Bob's Fudge Factory currently makes fudge for retail and mail order customers. It also offers a variety of roasted nuts. Fudge sales have increased over the past year, so Bob is considering...
-
9. a) Explain how a table helps you solve an inequality. b) Use a table to you determine when the inequality.x-x-13> 7 is true and when it is false. 10. Sketch the graph of f(x) = x - 2x and use the...
-
what are the hormonal and cellular mechanisms regulating gametogenesis, folliculogenesis, and spermatogenesis, and how do disruptions in these processes contribute to infertility and reproductive...
-
Within the realm of cardiovascular physiology, what are the underlying mechanisms driving the Frank-Starling mechanism, and how do alterations in preload, afterload, and contractility impact cardiac...
-
What are the types of long-term Business loans?
-
Examine the three economic indicators (e.g. economic growth, unemployment and inflation) for the past five years for a country of your choice. Explain how these indicators have changed since the...
-
Name and Explain two adjustable rate mortgages? What is mortgage? define mortgage.
-
Write an essay on civic engagement based on the interview, about minorities.
-
Let (x) = x 2 - 9, g(x) = 2x, and h(x) = x - 3. Find each of the following. (((--) 2
-
A major advantage of using SPT is the minimization of average flowtime. What is a disadvantage of the use of SPT?
-
Line balancing is a technique for scheduling for a system that produces at what level of volume?
-
Give an example in which more than one priority rule is used simultaneously to create a sequence.
Study smarter with the SolutionInn App