Manitoba Transport collects 75% of its monthly sales immediately and the rest at the end of the month; has production costs that are 60% of sales; pays 50% of its bills immediately and the rest at the end of the month; and has four months of sales in inventory. Required: a) What is its break-even sales growth rate? b) Suppose Manitoba Transport adopts a more efficient inventory policy that reduces the size of the inventory to three months of sales. Manitoba Transport also reduces its production costs to 55% of sales. What is the new break-even sales growth rate?
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.
Step by step
Solved in 2 steps
