Run Ltd are a fitness shoe manufacturer based in Ballymount. Run Ltd are preparingtheir budgets for the next financial year ending 30 June 2022. They have prepared thefollowing sales budget:Quarter1234(July – Sept 21)(Oct – Dec 21)(Jan – March 22)(April – June 22)Sales (units)Selling price26,50022,00020,00028,500per unit€95€95€95€95All sales are on a cash basis.Run Ltd maintains a very strict inventory policy, whereby it plans to maintain closinginventory of finished goods of 25% of the next quarters sales demand. Sales Demandin Quarter 1 and 2 2023 is expected to be 20% higher than Quarter 1 and 2 2022.Each unit of finished product requires 1.5m? of leather and 1m? of rubber. Leathercurrently costs €25 per m? and rubber costs €10 per m?. As a result of Brexit, Run Ltdhave been informed that costs of raw materials are due to increase by 5% in Quarter3.You are informed that management require closing stock of raw materials equal to15% of the following quarter's production at the end of each quarter.Purchases are bought in month 3 of each quarter to ensure they have the requiredstock. One half of the purchases are paid in the month of purchase, whilst theremainder is paid one month after purchase. The creditors balance on the 1st July2021 is €500,000.Each unit manufactured requires 4.5 hours of direct labour. Employees are paid €10per hour.Run Limited will incur marketing and other expenditure of €10,000 per month and rentand rates of €250,000 in the financial year to June 2022. The cash balance on the 1stJuly 2021 is €75,000. Q 2 (d)Confirm the accounts payable balance as at 30th June 2022.

Accounts payables are the amounts that the company has to pay to its creditors. This is presented in…

Run Ltd are a fitness shoe manufacturer based in Ballymount. Run Ltd are preparing their budgets for the next financial year ending 30 June 2022. They have prepared the following sales budget: Quarter 1 2 3 4 (July – Sept 21). (Oct - Dec 21) (Jan - March 22) (April – June 22) Sales (units) Selling price per unit 26,500 22,000 20,000 28,500 €95 €95 €95 €95 All sales are on a cash basis. Run Ltd maintains a very strict inventory policy, whereby it plans to maintain closing inventory of finished goods of 25% of the next quarters sales demand. Sales Demand in Quarter 1 and 2 2023 is expected to be 20% higher than Quarter 1 and 2 2022.

Run Ltd are a fitness shoe manufacturer based in Ballymount. Run Ltd are preparing their budgets for the next financial year ending 30 June 2022. They have prepared the following sales budget: Quarter 1 2 3 4 (July – Sept 21). (Oct - Dec 21) (Jan - March 22) (April – June 22) Sales (units) Selling price per unit 26,500 22,000 20,000 28,500 €95 €95 €95 €95 All sales are on a cash basis. Run Ltd maintains a very strict inventory policy, whereby it plans to maintain closing inventory of finished goods of 25% of the next quarters sales demand. Sales Demand in Quarter 1 and 2 2023 is expected to be 20% higher than Quarter 1 and 2 2022.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q.How does preparing the budget help Skulas’s management team better manage the company?