Quipplex Limited is currently preparing budgets for September to December. Its estimated sales figures in units are as follows: September October November December Sales (units) 14,222 6,475 14,426 19,194 Inventories at 31 August totalled 16,119 units, and inventories are to be kept at a constant level for all months except December, when opening inventories on 1 December are to be increased to 24,597. Inventories will revert to the normal level on 31 December. Inventories will cost £2 per unit throughout the period, and suppliers allow Quipplex Ltd to pay in the month following an order. Other relevant information is that 6,246 units were bought in August. Requirement 1: Prepare Quipplex Ltd's inventories budget (in units) for September to December. Requirement 2: Prepare the information relevant to inventories purchases that would appear in the cash budget for the period.
Quipplex Limited is currently preparing budgets for September to December. Its estimated sales figures in units are as follows: September October November December Sales (units) 14,222 6,475 14,426 19,194 Inventories at 31 August totalled 16,119 units, and inventories are to be kept at a constant level for all months except December, when opening inventories on 1 December are to be increased to 24,597. Inventories will revert to the normal level on 31 December. Inventories will cost £2 per unit throughout the period, and suppliers allow Quipplex Ltd to pay in the month following an order. Other relevant information is that 6,246 units were bought in August. Requirement 1: Prepare Quipplex Ltd's inventories budget (in units) for September to December. Requirement 2: Prepare the information relevant to inventories purchases that would appear in the cash budget for the period.
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
Quipplex Limited is currently preparing budgets for September to December. Its estimated sales figures in units are as follows:
September
October
November
December
Sales (units)
14,222
6,475
14,426
19,194
Inventories at 31 August totalled
16,119
units, and inventories are to be kept at a constant level for all months except December, when opening inventories on 1 December are to be increased to
24,597.
Inventories will revert to the normal level on 31 December.Inventories will cost £2 per unit throughout the period, and suppliers allow
Quipplex
Ltd to pay in the month following an order. Other relevant information is that
6,246
units were bought in August.Requirement 1: Prepare
Quipplex
Ltd's inventories budget (in units) for September to December.Requirement 2: Prepare the information relevant to inventories purchases that would appear in the cash budget for the period.
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