Executive officers of Benson Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources: Source of Estimate Sales manager Marketing consultant First Second Third Fourth Quarter Quarter Quarter Quarter $ 389,000 516,000 $ 315,000 $ 280,000 457,000 406,000 $ 471,000 649,000 Benson's past experience indicates that cost of goods sold is about 55 percent of sales revenue. The company tries to maintain 15 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $31,000. Next year's ending inventory is budgeted to be $32,000. Required Prepare an inventory purchases budget using the sales manager's estimate. Prepare an inventory purchases budget using the marketing consultant's estimate.
Executive officers of Benson Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources: Source of Estimate Sales manager Marketing consultant First Second Third Fourth Quarter Quarter Quarter Quarter $ 389,000 516,000 $ 315,000 $ 280,000 457,000 406,000 $ 471,000 649,000 Benson's past experience indicates that cost of goods sold is about 55 percent of sales revenue. The company tries to maintain 15 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $31,000. Next year's ending inventory is budgeted to be $32,000. Required Prepare an inventory purchases budget using the sales manager's estimate. Prepare an inventory purchases budget using the marketing consultant's estimate.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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:Executive officers of Benson Company are wrestling with their budget for the next year. The following are two different
sales estimates provided by two difference sources:
Source of
Estimate
Sales
manager
Marketing
consultant
First Second Third Fourth
Quarter Quarter Quarter Quarter
$ 389,000
516,000
$ 315,000 $ 280,000
457,000
406,000
$ 471,000
649,000
Benson's past experience indicates that cost of goods sold is about 55 percent of sales revenue. The company tries to
maintain 15 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's
ending inventory is $31,000. Next year's ending inventory is budgeted to be $32,000.
Required
Prepare an inventory purchases budget using the sales manager's estimate.
Prepare an inventory purchases budget using the marketing consultant's estimate.
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