Webster provides the following information regarding its actual and future sales: January Actual February Actual 50,000 $ 80,000 $ May Forecast 90,000 S 100,000 $ 120,000 40,000 $ 60,000 March April Forecast Forecast Cash Sales Credit Sales $ 80,000 $ 12,000 $ 90,000 $ Management expects that 40% of credit sales are collected in the month of the sale. 40% are collected in the month after the month of sale. 20% are collected in the month following. na memo to your team (who are preparing the budgets), management also provides the following information: - The company has an obligation to repay $120,000 in debt in April. There is no debt to be repayed in the other months - Cost of sales is 50% of sales revenue. - The company has regular deliveries of inventory to ensure that it can continue to meet its customer obligations. Inventory deliveries are paid in the following month and expected to be equal to 60% of sales in the delivery month. - Salaries and wage expenses add up to $10,000 per month. A further 20% is added for a variety of on costs. These amounts are paid in the same month. - Utilities costs are $3,000, $3,000, $4,000 and $5,000 in each of February, March, April and May, respectively. These costs are paid in the month following. - On the final day in April, the company commissions a long-term advertising contract for the following 12 months, to be used monthly. The contract is paid upfront on the same day. The contract is worth $48,000 spread equally across the 12 months. - The company has several items of PPE. At the end of April, it purchases another vehicle to $20,000. Depreciation prior to the purchase was $4,000 per month. Following, the purchase of the new vehicle, depreciation is expected to increase to $4,500 per month. - Management expects to pay $1,000 in interest each month.
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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