Tiki Company has projected sales and production in units for the second quarter of the coming year as follows: April May June 50,000 40,000 60,000 Production 60,000 50,000 50,000 Sales Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April. All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $500,000 ($90,000 from February's sales and the remainder from March). Required: 1. Prepare a schedule for each month showing budgeted cash disbursements for Tiki Company. 2. Prepare a schedule for each month showing budgeted cash receipts for Tiki Company.
Tiki Company has projected sales and production in units for the second quarter of the coming year as follows: April May June 50,000 40,000 60,000 Production 60,000 50,000 50,000 Sales Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April. All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $500,000 ($90,000 from February's sales and the remainder from March). Required: 1. Prepare a schedule for each month showing budgeted cash disbursements for Tiki Company. 2. Prepare a schedule for each month showing budgeted cash receipts for Tiki Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Tiki Company has projected sales and production in units for the second quarter of the coming year as follows:
April May June
50,000 40,000 60,000
Sales
Production 60,000 50,000 50,000
Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the
month in which they are incurred and the balance in the following month. Selling and administrative expenses will
amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April.
All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in
the month following the month of sale, and the remaining 10% in the second month following the month of sale.
Accounts receivable on April 1 totaled $500,000 ($90,000 from February's sales and the remainder from March).
Required:
1. Prepare a schedule for each month showing budgeted cash disbursements for Tiki Company.
2. Prepare a schedule for each month showing budgeted cas receipts for Tiki Company.
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