Create a cash payments budget with the following information: I-Frame Inc. manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $14 per hour. I-Frame has the following inventory policies: • Ending finished goods inventory should be 40% of next month's sales. • Ending direct materials inventory should be 30% of next month's production. Expected unit sales (frames) for the upcoming months follow: Expected Sales Units March 330
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.
![Create a cash payments budget with the following information:
I-Frame Inc. manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet
of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor
rate averages $14 per hour. I-Frame has the following inventory policies:
• Ending finished goods inventory should be 40% of next month's sales.
• Ending direct materials inventory should be 30% of next month's production.
Expected unit sales (frames) for the upcoming months follow:
Expected Sales Units
March
April
May
June
330
360
410
510
485
535
July
August
Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed
manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 4,000
units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per
unit sold.
Of its sales, 80% is in cash and 20% is on credit. Of the credit sales, 50% is collected during the same
month of the sale, and 50% is collected during the month following the sale.
Of direct materials purchases, 80% is paid for during the month purchased and 20% is paid in the
following month. Direct materials purchases for March 1 totaled $2,800. All other operating costs are paid
during the month incurred. Monthly fixed manufacturing overhead includes $260 in depreciation. During
April, I-Frame plans to pay $2,500 for a piece of equipment.
I-Frame had $13,500 cash on hand on April 1. Assume the company can borrow interest-free in
increments of $1,000 to maintain a $13,000 minimum ending cash balance. Repayments are made in the
following month, assuming sufficient cash is available. (For example, if you need $4,300 at the end of April
to meet your desired ending cash balance, you would borrow $5,000 in April, and repay the $5,000 in
May).
Required:
Enter the given data into Excel and prepare the following operating and financial budgets](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea6bde4e-c725-4e00-a32f-5e39c02069ee%2F5833252b-c0a9-4764-9c6c-f341321464fe%2Fibot4g4_processed.jpeg&w=3840&q=75)
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