Preparing an operating budget—sales budget; inventory, purchases and COGS budget and S&A expense budget Ballard Office Supply’s March 31, 2018, balance sheet follows: The budget committee of Ballard Office Supply has assembled the following data. Sales in April are expected to be $160,000. Ballard forecasts that monthly sales will increase 2% over April sales in May. June’s sales will increase by 4% over April sales. July sales will increase 20% over April sales. Ballard maintains inventory of $7,000 plus 25% of the cost of goods sold budgeted for the following month. Cost of goods sold equal 50% of sales revenue. Monthly salaries amount to $3,000. Sales commissions equal 5% of sales for that month. Other monthly expenses are as follows: Rent: $3,400 Depreciation: $800 Insurance: $300 Income tax: $1,500 Requirements Prepare Ballard’s sales budget for April and May 2018. Round all calculations to the nearest dollar. Prepare Ballard’s inventory, purchases, and cost of goods sold budget for April and May. Prepare Ballard’s selling and administrative expense budget for April and May
Preparing an operating budget—sales budget; inventory, purchases and COGS budget and S&A expense budget Ballard Office Supply’s March 31, 2018, balance sheet follows: The budget committee of Ballard Office Supply has assembled the following data. Sales in April are expected to be $160,000. Ballard forecasts that monthly sales will increase 2% over April sales in May. June’s sales will increase by 4% over April sales. July sales will increase 20% over April sales. Ballard maintains inventory of $7,000 plus 25% of the cost of goods sold budgeted for the following month. Cost of goods sold equal 50% of sales revenue. Monthly salaries amount to $3,000. Sales commissions equal 5% of sales for that month. Other monthly expenses are as follows: Rent: $3,400 Depreciation: $800 Insurance: $300 Income tax: $1,500 Requirements Prepare Ballard’s sales budget for April and May 2018. Round all calculations to the nearest dollar. Prepare Ballard’s inventory, purchases, and cost of goods sold budget for April and May. Prepare Ballard’s selling and administrative expense budget for April and May
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Preparing an operating budget—sales budget; inventory, purchases and COGS budget and S&A expense budget
Ballard Office Supply’s March 31, 2018,
The budget committee of Ballard Office Supply has assembled the following data.
- Sales in April are expected to be $160,000. Ballard
forecasts that monthly sales will increase 2% over April sales in May. June’s sales will increase by 4% over April sales. July sales will increase 20% over April sales. - Ballard maintains inventory of $7,000 plus 25% of the cost of goods sold budgeted for the following month. Cost of goods sold equal 50% of sales revenue.
- Monthly salaries amount to $3,000. Sales commissions equal 5% of sales for that month.
- Other monthly expenses are as follows:
- Rent: $3,400
Depreciation: $800- Insurance: $300
- Income tax: $1,500
Requirements
- Prepare Ballard’s sales budget for April and May 2018. Round all calculations to the nearest dollar.
- Prepare Ballard’s inventory, purchases, and cost of goods sold budget for April and May.
- Prepare Ballard’s selling and administrative expense budget for April and May
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