Prepare a quarterly sales budget in units and dollars. Prepare a quarterly production budget in units. Prepare a quarterly purchase budget for fabric and fiberfill. Prepare a quarterly labor budget.
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.
This problem has several components…
Last year sales = 500,000 units. The organization is planning a 10 percent increase in sales for the year 2012. The company is a retail organization that sees higher sales due to the holidays in the 4th quarter. 40 percent of the sales occur in the 4th quarter and the remaining units are sold equally over the other three quarters.
The beginning inventory for the year amounts to 20,000 units. The estimated sales for the first quarter of 2022 amount to 115,000 units. The company requires an ending inventory of 20 percent of the next quarters' sales.
The projected sales price is $50 per unit.
Materials: Each unit requires 1 yard of fabric and 1/2 pound of fiberfill stuffing. Fabric can be purchased at $9.00 per yard and fiberfill sells for $4.00 per pound. Desired ending inventories of materials are
|
listed as follows: |
|
|
|
|
|
|
Qtr1 |
Qtr2 |
Qtr3 |
Qtr4 |
|
Fabric/yds |
17,000 |
20,000 |
18,000 |
19,000 |
|
Fiberfill/lbs |
5,000 |
6,700 |
8,000 |
8,500 |
Beginning inventory of fabric is 16,000 yards and 6,000 lbs. of fiberfill. It takes an estimated time of .25 hours to produce one unit of output. The labor cost per hour is $25 per hour and the taxes and benefit load is 25 percent.
Required:
- Prepare a quarterly sales budget in units and dollars.
- Prepare a quarterly production budget in units.
- Prepare a quarterly purchase budget for fabric and fiberfill.
- Prepare a quarterly labor budget.
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