FRANCORP is preparing budgets for the quarter ending March 31. Budgeted sales for the next 5 months are as follows: January - 16250 units February - 16950 units March - 17200 units April - 18350 units May - 17900 units The selling price per unit is $15. Assume all sales are on account. This means that all sales ARE NOT CASH SALES. They are waiting for their customers to pay. FRANCORP'S collection pattern is: 25% in the month of sale 60% in the month following sale 15% in the second month following sale FRANCORP wants ending inventory to be equal to 30% of the following month's budgeted sales in units. As well, assume on December 31 of the previous quarter 5,500 units were on hand. Determine the required production units for the month of March. a. 15,500 units b. 19,100 units c. 18,075 units d. 17,545 units
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.
FRANCORP is preparing budgets for the quarter ending March 31. Budgeted sales for the next 5 months are as follows:
January - 16250 units
February - 16950 units
March - 17200 units
April - 18350 units
May - 17900 units
The selling price per unit is $15.
Assume all sales are on account. This means that all sales ARE NOT CASH SALES. They are waiting for their customers to pay. FRANCORP'S collection pattern is:
25% in the month of sale
60% in the month following sale
15% in the second month following sale
FRANCORP wants ending inventory to be equal to 30% of the following month's budgeted sales in units. As well, assume on December 31 of the previous quarter 5,500 units were on hand. Determine the required production units for the month of March.
a. 15,500 units
b. 19,100 units
c. 18,075 units
d. 17,545 units
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