Saved Help Save & Exit Subm Check my work You have just been hired as a new in s
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Saved Help Save & Exit Subm Check my work You have just been hired as a new in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located master budget for The company ells many styles of earrings, but all are sold for the same price-$14 per pair. Actual sales of earings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) February (actual) 27,600 uly (budget March (aetual) April (budget) May (budget) 21,600 Jane (budget) 51.600 31,600 29,600 66,600 September (budget) 26,600 41,600 Auguat (budget 101,600 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4.80 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% s collected in the following month, and the remaining 10% is collected in t e second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below Variable: Sales commissione 4 of sales rixeds Advertising 280, 000Explanation / Answer
1.
Sales Budget
April
May
June
Quarter
Budgeted unit sales
66,600
101,600
51,600
219,800
Selling price per unit
$ 14
$ 14
$ 14
$ 14
Total sales
$ 932,400
$ 1,422,400
$ 722,400
$ 3,077,200
2.
Month
Sales in pairs
Price per pair
Total sales
February
27,600
$ 14
$ 386,400
March
41,600
$ 14
$ 582,400
April
66,600
$ 14
$ 932,400
May
101,600
$ 14
$ 1,422,400
June
51,600
$ 14
$ 722,400
Earrings unlimited
Schedule of cash collection
April
May
June
Quarter
February sales
$ 38,640
March sales
$ 407,680
$ 58,240
April sales
$ 186,480
$ 652,680
$ 93,240
May sales
$ 284,480
$ 995,680
June sales
$ 144,480
Total cash collection
$ 632,800
$ 995,400
$ 1,233,400
$ 2,861,600
3.
Earrings unlimited
Merchandise Purchase Budget
April
May
June
Quarter
Budgeted units sales
66,600
101,600
51,600
219,800
Add: Ending inventory
40,640
20,640
12,640
12,640
Total needs
107,240
122,240
64,240
232,440
Less: Beginning inventory
26,640
40,640
20,640
26,640
Required purchases
80,600
81,600
43,600
205,800
unit cost
$4.80
$4.80
$4.80
$4.80
Required dollar purchased
$386,880
$391,680
$209,280
$987,840
4.
Month
Sales
Purchases per unit
Total
March
41,600
$4.80
$ 199,680
April
66,600
$4.80
$ 319,680
May
101,600
$4.80
$ 487,680
June
51,600
$4.80
$ 247,680
July
31,600
$4.80
$ 151,680
Earrings unlimited
Budgeted Cash Disbursement for merchandise Purchases
April
May
June
Quarter
Accounts payable
$ 99,840
$ 159,840
$ 243,840
$ 123,840
April purchases
$ 159,840
$ 159,840
May purchases
$ 243,840
$ 243,840
June purchases
$ 123,840
Total cash payment
$ 259,680
$ 403,680
$ 367,680
$ 1,031,040
****Answered for first 4 requirements.
Sales Budget
April
May
June
Quarter
Budgeted unit sales
66,600
101,600
51,600
219,800
Selling price per unit
$ 14
$ 14
$ 14
$ 14
Total sales
$ 932,400
$ 1,422,400
$ 722,400
$ 3,077,200
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