Total sales $214,000 Budgeted purchases of direct materials Budgeted direct labor cost Budgeted manufacturing overhead costs: Variable manufacturing overhead 40,300 37,200 1,150 Depreciation 1,200 Insurance and property taxes 6,600 Budgeted selling and administrative expenses: Salaries expense 13,000 Rent expense 2,500 Insurance expense 1,100 Depreciation expense 350 Supplies expense 4,280
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.
Preparing a financial budget——schedule of cash receipts schedule of cash payments,
Haney Company has provided the following budget information for the first quarter of 2018.
Additional data related to the first quarter of 2018 for Haney Company:
- Capital expenditures include $538,000 for new manufacturing equipment, to be purchased and paid in the first quarter.
- Cash receipts are 65% of sales in the quarter of the sale and 35% in the quarter following the sale.
- Direct materials purchases are paid 50% in the quarter purchased and 50% in the next quarter.
- Direct labor, manufacturing
overhead , and selling and administrative costs are paid in the quarter incurred. - Income tax expense for the first quarter is projected at $44,000 and is paid in the quarter incurred.
- Haney Company expects to have adequate cash funds and does not anticipate borrowing in the first quartet.
- The December 31, 2017, balance in Cash is $45,000, in
Accounts Receivable is $23,200, and in Accounts Payable is $9,000.
Requirements
- Prepare Haney Company’s schedule of cash receipts from customers and schedule of cash payments for the first quarter of 2018.
- Prepare Haney Company’s cash budget for the first quarter of 2018.
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