Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow the format of the budgets shown in chapter 8 of your textbook. The budgets should be in proper format. That is, each budget should be properly labeled and should start and end on one page without having page breaks in the middle. There can be more than one budget or a budget schedule on the same page (For example, the Sales Budget and the Schedule of Cash Collections can be on the same page) so long as they completely fit on that same page. You need to put your name and your ID # on every page of the assignment. 1. Prepare a sales budget for January through March and for the Quarter in total. The selling price per unit is $45.00. Use the last five digits in your ID number as basis for the data for budgeted sales in units. Budgeted sales are obtained by multiplying each number in the ID by 10,000. However, note that if your ID# contains the number 0 use 10 instead (ie a 0 is equal to 100,000.) For example, if the last five digits in your student ID are 14607, the budgeted sales in units would be: December of the previous year 10,000 January 40,000 60,000 February March April 100,000 20,000 2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through March and for the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 50% of next month's projected sales. 3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $80,000.00, and this was the ending cash balance in the cash account on December 31. Additional Data: • Past experience shows that 40% of sales are collected in the month of the sale, and 60% in the month following the sale. • • Selling cost is $12 per unit sold. Other expenses include $35,000 per month for rent, $104,000 for advertising, and $76,000 per month for depreciation. • All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases of inventory are paid in February). • The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when a borrowing need is identified and repayments are made at the end of a month when the company has excess cash(ie. this company does not take out additional loans to pay current loans.) • Also, interest associated with a loan is only paid at the time when that loan is paid (i.e. a loan is only paid if there is enough cash to pay off the whole loan, any interest associated with it, and the company still has enough cash left over to meet its requirement for the minimum cash balance.) 4. Prepare the Budgeted Income Statement based on all of the information given above. Label the budgets prepared in Steps 1-4 as budget scenario A. 5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions: B. Ending Inventory 90% 10% 6. Write a brief analysis of the three inventory policies depicted in the budget scenarios A, B and C and recommend a policy that the company should implement. Give reasons for your recommendation Your write-up should be based on the results you obtained from the analyses in steps 1-5 above for each of the scenarios A, B, and C. Assume that you are writing on behalf of a professional consultant advising the President of the company about the company's inventory policies. Your write-up should be in the form of a one-page Memo to the President of the company, Organization, grammar, and spelling are important Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow the format of the budgets shown in chapter 8 of your textbook. The budgets should be in proper format. That is, each budget should be properly labeled and should start and end on one page without having page breaks in the middle. There can be more than one budget or a budget schedule on the same page (For example, the Sales Budget and the Schedule of Cash Collections can be on the same page) so long as they completely fit on that same page. You need to put your name and your ID # on every page of the assignment. 1. Prepare a sales budget for January through March and for the Quarter in total. The selling price per unit is $45.00. Use the last five digits in your ID number as basis for the data for budgeted sales in units. Budgeted sales are obtained by multiplying each number in the ID by 10,000. However, note that if your ID# contains the number 0 use 10 instead (ie a 0 is equal to 100,000.) For example, if the last five digits in your student ID are 14607, the budgeted sales in units would be: December of the previous year 10,000 January 40,000 60,000 February March April 100,000 20,000 2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through March and for the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 50% of next month's projected sales. 3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $80,000.00, and this was the ending cash balance in the cash account on December 31. Additional Data: • Past experience shows that 40% of sales are collected in the month of the sale, and 60% in the month following the sale. • • Selling cost is $12 per unit sold. Other expenses include $35,000 per month for rent, $104,000 for advertising, and $76,000 per month for depreciation. • All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases of inventory are paid in February). • The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when a borrowing need is identified and repayments are made at the end of a month when the company has excess cash(ie. this company does not take out additional loans to pay current loans.) • Also, interest associated with a loan is only paid at the time when that loan is paid (i.e. a loan is only paid if there is enough cash to pay off the whole loan, any interest associated with it, and the company still has enough cash left over to meet its requirement for the minimum cash balance.) 4. Prepare the Budgeted Income Statement based on all of the information given above. Label the budgets prepared in Steps 1-4 as budget scenario A. 5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions: B. Ending Inventory 90% 10% 6. Write a brief analysis of the three inventory policies depicted in the budget scenarios A, B and C and recommend a policy that the company should implement. Give reasons for your recommendation Your write-up should be based on the results you obtained from the analyses in steps 1-5 above for each of the scenarios A, B, and C. Assume that you are writing on behalf of a professional consultant advising the President of the company about the company's inventory policies. Your write-up should be in the form of a one-page Memo to the President of the company, Organization, grammar, and spelling are important Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow the format of the budgets shown in chapter 8 of your textbook. The budgets should be in proper format. That is, each budget should be properly labeled and should start and end on one page without having page breaks in the middle. There can be more than one budget or a budget schedule on the same page (For example, the Sales Budget and the Schedule of Cash Collections can be on the same page) so long as they completely fit on that same page. You need to put your name and your ID # on every page of the assignment. 1. Prepare a sales budget for January through March and for the Quarter in total. The selling price per unit is $45.00. Use the last five digits in your ID number as basis for the data for budgeted sales in units. Budgeted sales are obtained by multiplying each number in the ID by 10,000. However, note that if your ID# contains the number 0 use 10 instead (ie a 0 is equal to 100,000.) For example, if the last five digits in your student ID are 14607, the budgeted sales in units would be: December of the previous year 10,000 January 40,000 60,000 February March April 100,000 20,000 2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through March and for the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 50% of next month's projected sales. 3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $80,000.00, and this was the ending cash balance in the cash account on December 31. Additional Data: • Past experience shows that 40% of sales are collected in the month of the sale, and 60% in the month following the sale. • • Selling cost is $12 per unit sold. Other expenses include $35,000 per month for rent, $104,000 for advertising, and $76,000 per month for depreciation. • All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases of inventory are paid in February). • The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when a borrowing need is identified and repayments are made at the end of a month when the company has excess cash(ie. this company does not take out additional loans to pay current loans.) • Also, interest associated with a loan is only paid at the time when that loan is paid (i.e. a loan is only paid if there is enough cash to pay off the whole loan, any interest associated with it, and the company still has enough cash left over to meet its requirement for the minimum cash balance.) 4. Prepare the Budgeted Income Statement based on all of the information given above. Label the budgets prepared in Steps 1-4 as budget scenario A. 5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions: B. Ending Inventory 90% 10% 6. Write a brief analysis of the three inventory policies depicted in the budget scenarios A, B and C and recommend a policy that the company should implement. Give reasons for your recommendation Your write-up should be based on the results you obtained from the analyses in steps 1-5 above for each of the scenarios A, B, and C. Assume that you are writing on behalf of a professional consultant advising the President of the company about the company's inventory policies. Your write-up should be in the form of a one-page Memo to the President of the company, Organization, grammar, and spelling are important Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow the format of the budgets shown in chapter 8 of your textbook. The budgets should be in proper format. That is, each budget should be properly labeled and should start and end on one page without having page breaks in the middle. There can be more than one budget or a budget schedule on the same page (For example, the Sales Budget and the Schedule of Cash Collections can be on the same page) so long as they completely fit on that same page. You need to put your name and your ID # on every page of the assignment. 1. Prepare a sales budget for January through March and for the Quarter in total. The selling price per unit is $45.00. Use the last five digits in your ID number as basis for the data for budgeted sales in units. Budgeted sales are obtained by multiplying each number in the ID by 10,000. However, note that if your ID# contains the number 0 use 10 instead (ie a 0 is equal to 100,000.) For example, if the last five digits in your student ID are 14607, the budgeted sales in units would be: December of the previous year 10,000 January 40,000 60,000 February March April 100,000 20,000 2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through March and for the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 50% of next month's projected sales. 3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $80,000.00, and this was the ending cash balance in the cash account on December 31. Additional Data: • Past experience shows that 40% of sales are collected in the month of the sale, and 60% in the month following the sale. • • Selling cost is $12 per unit sold. Other expenses include $35,000 per month for rent, $104,000 for advertising, and $76,000 per month for depreciation. • All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases of inventory are paid in February). • The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when a borrowing need is identified and repayments are made at the end of a month when the company has excess cash(ie. this company does not take out additional loans to pay current loans.) • Also, interest associated with a loan is only paid at the time when that loan is paid (i.e. a loan is only paid if there is enough cash to pay off the whole loan, any interest associated with it, and the company still has enough cash left over to meet its requirement for the minimum cash balance.) 4. Prepare the Budgeted Income Statement based on all of the information given above. Label the budgets prepared in Steps 1-4 as budget scenario A. 5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions: B. Ending Inventory 90% 10% 6. Write a brief analysis of the three inventory policies depicted in the budget scenarios A, B and C and recommend a policy that the company should implement. Give reasons for your recommendation Your write-up should be based on the results you obtained from the analyses in steps 1-5 above for each of the scenarios A, B, and C. Assume that you are writing on behalf of a professional consultant advising the President of the company about the company's inventory policies. Your write-up should be in the form of a one-page Memo to the President of the company, Organization, grammar, and spelling are important
Expert Answer:
Answer rating: 100% (QA)
Budget for January to March First Quarter 1 Revenue Based on the given information the company expec... View the full answer
Posted Date:
Students also viewed these accounting questions
-
A corporation is subject to a federal income tax rate of 21% and a state income tax rate of 7%. Therefore, the combined income tax rate is O A. equal to 28% OB. less than 28% OC. greater than 28%
-
Selling price per unit $750 Variable cost per unit $450 Annual fixed cost $180,000 Net income after tax $360,000 Tax rate 25% 1)Reduce the selling price by $60. The sales team forecast that with a...
-
Assume management predicts that the selling price per unit and variable cost per unit will be the same in 2014 as in 2013. Fixed manufacturing costs and marketing, distribution, and customer-service...
-
Can you provide an example of when you led a previous organization through a major operational change? Did you encounter any obstacles and how did you motivate and guide your team through these...
-
Which types of assets/liabilities lend themselves more easily to fair value measurements: financial or operating? Explain with reference to the hierarchy of inputs.
-
SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity...
-
a. Solve problem 13.D11 with a form of the Kremser equation. Data From 13.D11 A fractional extraction system (Figure 13-5) is separating abietic acid from other acids. Solvent 1 , heptane, enters at...
-
Average flow velocity in turbulent tube flow. (a) For the turbulent flow in smooth circular tubes, the function 1 is sometimes useful for curve-fitting purposes: near Re = 4 x 10 3 , n = 6; near Re =...
-
Basic assumptions represent the core values of an organization and are
-
The Purchases Ledger Control Accounts of Pfozer, a private company, for the month of January 2018 was prepared as shown below: Cash paid to suppliers Discount received Balance c/f Purchases Ledger...
-
Are virtual servers always better than physical servers?What advantages would you have in setting up one or more virtual machines for your home use?
-
Bornstein suggests that "morality must march with capacity," but when James Grant became head of UNICEF, only 20% of the world's children were immunized. So did the world have capacity? Or did Grant...
-
Assumethe role of a front office employee and develop a sponsorship presentationaddressing Team attendance using various bullet points targeting a Nike and Los Angeles Laker's partnership usingSports...
-
1 . a . What are the key elements of a Successful Business Model. Explain with examples? ( 6 marks ) 1 . b . Free offerings are rapidly spreading beyond online markets to physical world. How should...
-
Let { a n } n N 0 be the sequence defined by a_0 = 0 and a n = k = 1 n ( 2 k 1 ) 2 k 1 , n N Show that a n n N 0 is convergent with a limit of log 2. Hint: Rewrite each term in the sum as a...
-
Canada has a private market for the provision of health services, and until about 1970, spent the same % of GDP as the US on healthcare. Since that time, however, the rate of healthcare inflation in...
-
The linkage is made of two pin-connected A-36 steel members, each having a cross-sectional area of 1.5 in. If a vertical force of P = 50 kip is applied to point A, determine its vertical displacement...
-
What is the ideal number of children to have? This question was asked on the Sullivan Statistics Survey I. Draw a dot plot of the variable Children from theSullivanStatsSurveyI data set at...
-
Critic Ivor Smallbrain is watching the horror movie Salamanders on a Desert Island. In the film, there are 30 salamanders living on a desert island: 15 are red, 7 blue and 8 green. When two of a...
-
Find \(n\), given that both \(n\) and \(\sqrt{n-2}+\sqrt{n+2}\) are positive integers.
-
Environmental Business Consultants, LLC (EBC) has a contract with Terrabean Coffee, a large retail coffee company with 5,000 shops across North America, to manage the companys waste disposal and...
Study smarter with the SolutionInn App