Oriole Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses January February $374,400 $416,000 124,800 93,600 72,800 82,160 130,000 104,000 78,000 88,400 All sales are on account. Collections are expected to be 50% in the month of sale, 30 % in the first month following the sale, and 20% in he second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and he balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and dministrative expenses that include $1,040 of depreciation per month. Other data:
Oriole Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows. Sales Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses January February $374,400 $416,000 124,800 93,600 72,800 82,160 130,000 104,000 78,000 88,400 All sales are on account. Collections are expected to be 50% in the month of sale, 30 % in the first month following the sale, and 20% in he second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and he balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and dministrative expenses that include $1,040 of depreciation per month. Other data:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for
January and February.
November
December
January
February
Total collections $
ORIOLE COMPANY
Schedule of Expected Collections from Customers
December
January
February
January
Total payments
$
ORIOLECOMPANY
Schedule of Expected Payments for Direct Materials
$
February
January
5
February
Transcribed Image Text:Oriole Company prepares monthly cash budgets. Relevant data from operating budgets for 2022 are as follows.
Sales
Direct materials purchases
Direct labor
Manufacturing overhead
Selling and administrative expenses
Other data:
1
2.
3.
January
$374,400
124,800
4.
93,600
All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in
the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and
the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and
administrative expenses that include $1,040 of depreciation per month.
72,800
82,160
February
$416,000
130,000
104,000
78,000
88,400
A
Credit sales: November 2021, $260,000; December 2021, $332,800.
Purchases of direct materials: December 2021, $104,000.
Other receipts: January-Collection of December 31, 2021, notes receivable $15.600;
February-Proceeds from sale of securities $6,240.
Other disbursements: February-Payment of $6,240 cash dividend.
The company's cash balance on January 1, 2022, is expected to be $62,400. The company wants to maintain a minimum cash balance
of $52,000,
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