Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 5 percent for peaches and 10 percent for oranges. The current year’s sales revenue data follow. 1st Quarter 2nd Quarter 3rd Quarter 4th Quater Total Peaches 236,000 256,000 316,000 256,000 1,064,000 Oranges 411,000 461,000 581,000 391,000 1,844,000 Total 647,000 717,000 897,000 647,000 2,908,000 Based on the company’s past experience, cost of goods sold is usually 65percent of sales revenue. Company policy is to keep 15 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. (Hint: Use the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.) Required A. Prepare the company’s sales budget for the next year for each quarter by individual product. B. If the selling and administrative expenses are estimated to be $640,000, prepare the company’s budgeted annual income statement. C. Ms. Jasper estimates next year’s ending inventory will be $34,600 for peaches and $56,600 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product. Jasper Fruits Corporation Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Peaches Oranges Total Sales Revenue Jasper Fruits Corporation Inventory Purchases Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Peaches: Sales Cost of goods sold Desired ending inventory as percent of next quarter's cost of goods sold Ending inventory Total inventory required Less: Beginning inventory Budgeted inventory purchases $ Oranges: Sales Cost of goods sold Desired ending inventory as percent of next quarter's cost of goods sold Ending inventory Total inventory required Less: Beginning inventory Budgeted inventory purchases $ Total budgeted inventory purchases $
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.
Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 5 percent for peaches and 10 percent for oranges. The current year’s sales revenue data follow.
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quater | Total | |
| Peaches | 236,000 | 256,000 | 316,000 | 256,000 | 1,064,000 |
| Oranges | 411,000 | 461,000 | 581,000 | 391,000 | 1,844,000 |
| Total | 647,000 | 717,000 | 897,000 | 647,000 | 2,908,000 |
Based on the company’s past experience, cost of goods sold is usually 65percent of sales revenue. Company policy is to keep 15 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. (Hint: Use the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)
Required
A. Prepare the company’s sales budget for the next year for each quarter by individual product.
B. If the selling and administrative expenses are estimated to be $640,000, prepare the company’s
C. Ms. Jasper estimates next year’s ending inventory will be $34,600 for peaches and $56,600 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product.
| Jasper Fruits Corporation | |||||
| Sales Budget | |||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Total | |
| Peaches | |||||
| Oranges | |||||
| Total Sales Revenue |
| Jasper Fruits Corporation | |||||
| Inventory Purchases Budget | |||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Total | |
| Peaches: | |||||
| Sales | |||||
| Cost of goods sold | |||||
| Desired ending inventory as percent of next quarter's cost of goods sold | |||||
| Ending inventory | |||||
| Total inventory required | |||||
| Less: Beginning inventory | |||||
| Budgeted inventory purchases $ | |||||
| Oranges: | |||||
| Sales | |||||
| Cost of goods sold | |||||
| Desired ending inventory as percent of next quarter's cost of goods sold | |||||
| Ending inventory | |||||
| Total inventory required | |||||
| Less: Beginning inventory | |||||
| Budgeted inventory purchases $ | |||||
| Total budgeted inventory purchases $ |
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