The Out West Division of XYZ has been asked to prepare a quarterly budgeted income statement for 2020. The regional manager expects that sales in the first quarter of 2020 will increase in volume by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2020. The corporate head office has requested that the regional manager sustain an inventory in pesos equal to 16% of the next quarter’s sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2019 is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated as follows: Rent expense P4,400 Depreciation on office equipment P2,000 Utilities expense P1,800 Miscellaneous expenses 2% of sales The income statement information for the first quarter of 2019 is as follows: Sales P150,000 Cost of goods sold 66,000 Prepare a budgeted quarterly income statement for the first quarter of 2020.
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 Out West Division of XYZ has been asked to prepare a quarterly budgeted income statement for 2020. The regional manager expects that sales in the first quarter of 2020 will increase in volume by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2020.
The corporate head office has requested that the regional manager sustain an inventory in pesos equal to 16% of the next quarter’s sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2019 is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated as follows:
Rent expense P4,400
Utilities expense P1,800
Miscellaneous expenses 2% of sales
The income statement information for the first quarter of 2019 is as follows:
Sales P150,000
Cost of goods sold 66,000
Prepare a budgeted quarterly income statement for the first quarter of 2020.
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