Northern Swit is famous in making ice cream. One unique flavor of ice cream produced by Northern Swits is Black Raspberry Crunch. Assume that Northern Swits prepares monthly cash budget. The following information is provided by their accountant Kritesh for the year 2016: August (2016) $ September (2016) $ Sales 460,000 412,000 Direct material purchased 185,000 210,000 Direct Labour 70,000 85,000 Manufacturing overhead 50,000 65,000 Selling and administrative expenses 85,000 95,000 Collections are expected to be 75% in the month of sale, and 25% in the month following sale. Northern Swits pays 60% of the direct materials purchases in cash in the month of purchase, and the balance due in the month following the purchase. All other items are paid in the month incurred. Other information: Sales July 2016: $380,000 Purchase of direct materials: July 2016: $175,000 Other receipts: August – Donation received $2,000 September – sale of used equipment $4,000 Other disbursement: September- Purchased equipment 4,000 Repaid debt: August $30,000 Required: Prepare the schedules of expected cash collection of Northern Swits from customers for August and September. Prepare the schedules of expected cash payment of Northern Swits for August and September .
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Northern Swit is famous in making ice cream. One unique flavor of ice cream produced by Northern Swits is Black Raspberry Crunch. Assume that Northern Swits prepares monthly cash budget . The following information is provided by their accountant Kritesh for the year 2016:
|
August (2016)$ |
September (2016)$ |
Sales |
460,000 |
412,000 |
Direct material purchased |
185,000 |
210,000 |
Direct Labour |
70,000 |
85,000 |
Manufacturing
|
50,000 |
65,000 |
Selling and administrative expenses |
85,000 |
95,000 |
Collections are expected to be 75% in the month of sale, and 25% in the month following sale. Northern Swits pays 60% of the direct materials purchases in cash in the month of purchase, and the balance due in the month following the purchase. All other items are paid in the month incurred.
Other information:
Sales July 2016: $380,000
Purchase of direct materials: July 2016: $175,000
Other receipts: August – Donation received $2,000
September – sale of used equipment $4,000
Other disbursement: September- Purchased equipment 4,000
Repaid debt: August $30,000
Required:
- Prepare the schedules of expected cash collection of Northern Swits from customers for August and September.
- Prepare the schedules of expected cash payment of Northern Swits for August and September .
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