The Samson Corporation and its subunits must prepare budgets. One unique subunit of the Corporation is Babcock Ice Cream. A functioning producer of dairy product and famous at least on delicious ice cream, Assume that Babcock Ice Cream prepares monthly cash budgets relevant data from assumed operating budget for 2017 are: January February Sales 460,000 412,000 Direct materials purchases 185,000 210,000 Direct labor 70,000 85,000 Manufacturing overhead 50,000 65,000 Selling and Administrative 85,000 95,000 Babcock sells its ice cream in shops on campus as well as to local stores. Collections are expected to be 75% in the month sales and 25% in the month following sale. Babcock pays 60% of direct materials purchases in cash in the month of purchase and the balance due in the month following purchase. All other items above are paid in the month incurred. (Depreciation has been excluded from manufacturing overhead and selling and administrative expenses). Other Data: Sales December 2016 . P320,000 Purchases of Direct materials: December 2016 P175,000 Other receipt: January – Donation received P2,000 February –Sale of used equipment P4, 000 Other disbursement February – Purchased equipment P10,000 Repaid debt January P30, 000. The company cash balance on January 1, 2017 is expected to be P50, 000. The company wants to maintain a minimum cash balance of P45, 000. Requirement: Prepare schedule for the following: Schedule of Cash Receipt Schedule of Cash Payment for direct material purchases Prepare a Cash budget for January and February 2017.
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 Samson Corporation and its subunits must prepare budgets. One unique subunit of the Corporation is Babcock Ice Cream. A functioning producer of dairy product and famous at least on delicious ice cream,
Assume that Babcock Ice Cream prepares monthly cash budgets relevant data from assumed operating budget for 2017 are:
| January | February | |
| Sales | 460,000 | 412,000 |
| Direct materials purchases | 185,000 | 210,000 |
| Direct labor | 70,000 | 85,000 |
| Manufacturing |
50,000 | 65,000 |
| Selling and Administrative | 85,000 | 95,000 |
Babcock sells its ice cream in shops on campus as well as to local stores. Collections are expected to be 75% in the month sales and 25% in the month following sale. Babcock pays 60% of direct materials purchases in cash in the month of purchase and the balance due in the month following purchase. All other items above are paid in the month incurred. (
Other Data:
- Sales December 2016 . P320,000
- Purchases of Direct materials: December 2016 P175,000
- Other receipt: January – Donation received P2,000
February –Sale of used equipment P4, 000
- Other disbursement February – Purchased equipment P10,000
- Repaid debt January P30, 000.
The company cash balance on January 1, 2017 is expected to be P50, 000. The company wants to maintain a minimum cash balance of P45, 000.
Requirement:
- Prepare schedule for the following:
- Schedule of Cash Receipt
- Schedule of Cash Payment for direct material purchases
- Prepare a
Cash budget for January and February 2017.
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