Fanning Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Fanning’s policy is to maintain an ending inventory balance equal to 20 percent of the following month’s cost of goods sold. April’s budgeted cost of goods sold is $78,000. Complete the inventory purchases budget by filling in the missing amounts. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter. Inventory Purchases Budget January February March Budgeted cost of goods sold $56,000 $60,000 $66,000 12,000 Inventory needed 68,000 11,200 Required purchases (on account) $56,800
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.
Fanning Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Fanning’s policy is to maintain an ending inventory balance equal to 20 percent of the following month’s cost of goods sold. April’s budgeted cost of goods sold is $78,000.
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Complete the inventory purchases budget by filling in the missing amounts.
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Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement.
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Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.
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