The Budget committee of Georgina Company collect the following data for its Westwood Store in preparing budgeted Income Statement s for July and August 2018 Expected Sales: July 400,000, August 450,000 September 500,000 Cost of goods sold is expected to be 64% of Sales Company policy is to maintain ending merchandise inventory at 25% of the following month cost of goods sold Operating expenses are estimated to be: Sales salaries P40, 000 per month Advertising 4% of monthly sales Delivery expense 2% of monthly sales Sales commission 3% of monthly sales Rent expense P3, 000 per month Depreciation P 700 per month Utilities P 500 per month Insurance P 300 per month 5. Income taxes are estimated to be 30% of Income from operation Requirement: Prepare the Merchandise purchase budget for each month in columnar form Prepare budgeted income statement for each month in columnar form. Show the details of cost of goods sold in the statement
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.
The Budget committee of Georgina Company collect the following data for its Westwood Store in preparing
- Expected Sales: July 400,000, August 450,000 September 500,000
- Cost of goods sold is expected to be 64% of Sales
- Company policy is to maintain ending merchandise inventory at 25% of the following month cost of goods sold
- Operating expenses are estimated to be:
Sales salaries P40, 000 per month
Advertising 4% of monthly sales
Delivery expense 2% of monthly sales
Sales commission 3% of monthly sales
Rent expense P3, 000 per month
Utilities P 500 per month
Insurance P 300 per month
5. Income taxes are estimated to be 30% of Income from operation
Requirement:
- Prepare the Merchandise purchase budget for each month in columnar form
- Prepare budgeted income statement for each month in columnar form. Show the details of cost of goods sold in the statement
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