Brownsville Novelty Store prepared the following budget information for the month of May: • Sales are budgeted at $324,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. • Inventory was $94,000 on April 30; an inventory increase of $21,000 is planned for May 31. • All inventory is marked to sell at cost plus 50 percent. • Estimated expense for selling and administrative expenses for the month are $58,000. • Depreciation for May is projected at $7,000. Brownsville's budgeted operating income for May is: Multiple Choice $40,280. $12,280. $33,280. $86,000. $87,000.
Brownsville Novelty Store prepared the following budget information for the month of May: • Sales are budgeted at $324,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. • Inventory was $94,000 on April 30; an inventory increase of $21,000 is planned for May 31. • All inventory is marked to sell at cost plus 50 percent. • Estimated expense for selling and administrative expenses for the month are $58,000. • Depreciation for May is projected at $7,000. Brownsville's budgeted operating income for May is: Multiple Choice $40,280. $12,280. $33,280. $86,000. $87,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Brownsville Novelty Store prepared the following budget information for the month of May:
• Sales are budgeted at $324,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month.
• Inventory was $94,000 on April 30; an inventory increase of $21,000 is planned for May 31.
• All inventory is marked to sell at cost plus 50 percent.
• Estimated expense for selling and administrative expenses for the month are $58,000.
• Depreciation for May is projected at $7,000.
Brownsville's budgeted operating income for May is:
Multiple Choice
$40,280.
$12,280.
$33,280.
$86,000.
$87,000.
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