It is budgeting time for Rod Co. The following assumptions were agreed upon for the next year after strategic planning, which covered a five-year horizon: 1. Sales are estimated to be at 70,000 units at its national selling price of P126. 2. Sales discounts are given to various customers at different rates, and the net to gross ratio is at 93%. 3. Markup on merchandise is at 45% of the invoice cost. Beginning inventory is P80,900 and is expected to be reduced by P15,000 at the end of the period. 4. Selling and administrative expenses are expected to be 15% of gross sales. 5. Depreciation is computed at P500,000. 6. Seventy- five percent (75%) of sales are on credit. Doubtful accounts expense is estimated to be 1.5% of credit sales. Required: What is the budgeted income statement for Rod Co.
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.
It is budgeting time for Rod Co. The following assumptions
were agreed upon for the next year after strategic planning,
which covered a five-year horizon: 1. Sales are estimated to
be at 70,000 units at its national selling price of P126. 2.
Sales discounts are given to various customers at different
rates, and the net to gross ratio is at 93%. 3. Markup on
merchandise is at 45% of the invoice cost. Beginning
inventory is P80,900 and is expected to be reduced by
P15,000 at the end of the period. 4. Selling and
administrative expenses are expected to be 15% of gross
sales. 5.
five percent (75%) of sales are on credit. Doubtful accounts
expense is estimated to be 1.5% of credit sales. Required:
What is the
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