Required: Construct a profit plan for the first 6 months of 2018 using the templ

Question

Required: Construct a profit plan for the first 6 months of 2018 using the templates provided for Shady Lady, Inc (a fictional company). Assume it is the beginning of the year. This project must include all of the following schedules: 1. Cash Purchases Disbursements Budget 2. Operating Expense Budget 3. Summary Cash Budget 4. Budgeted Income Statement INFORMATION FOR SHADY LADY BUDGET PROJECT 1. Shady Lady, Inc. is a company that re-sells one product, an extraordinarily large and colorful sun shade umbrella. An overseas contractor makes the product exclusively for Shady Lady; so, Shady Lady has no manufacturing-related costs. 2. As of 11/17, each sun shade umbrella costs Shady Lady $4 per unit. Shady Lady currently sells each umbrella for S10 per unit. 3. The estimated sales (in units) are as follows: Nov 2017 11,250 Dec 2017 11,600 Jan 2018 10,000 Feb 2018 11,400 Mar 2018 13.000 Apr 2018 15,600 May 2018 18,000 June 2018 22,000 July 2018 19,000 4. Per an existing contract, the cost of each umbrella is scheduled to increase by 10% on March 1, 2018, To offset this increase, the company plans to raise the sales price to $1.00 per unit beginning May 1,2018. The sales forecast (i.e., estimated sales in units) takes this price increase inte account.

Explanation / Answer

Sales Budget Jan-18 Feb Mar Apr May June Total July Sales(units) 10000 11400 13000 15600 18000 22000 90000 19000 Selling price/unit 10 10 10 10 11 11 11 Sales $ 100000 114000 130000 156000 198000 242000 940000 209000 Cash sales 30% 30000 34200 39000 46800 59400 72600 282000 Credit sales 70% 70000 79800 91000 109200 138600 169400 658000 Total 100000 114000 130000 156000 198000 242000 940000 Sales Collections Budget Cash 30%*Sales $ 30000 34200 39000 46800 59400 72600 282000 Credit collections: 30%of 70% 21000 23940 27300 32760 41580 50820 197400 50% of 70% 40600 35000 39900 45500 54600 69300 284900 84700 16%*70% 12600 12992 11200 12768 14560 17472 81592 22176 27104 Total sales collections 104200 106132 117400 137828 170140 210192 845892 Uncollectible amt. Nov. 2017 sales Onwards 3150 3248 2800 3192 3640 4368 20398 Dec 2017 A/cs payable sales reqd 11600 Add: Cl.stock reqd 5000 Total needed 16600 Less: Op. inv. Avail. -5800 Purchases needed 10800 Purchase $ at 4 43200 A/cs.payable 60% 25920 (paid in January) Purchases budget July Sales(units)Reqd. 10000 11400 13000 15600 18000 22000 90000 19000 Add: Ending Inventory reqd. 5700 6500 7800 9000 11000 9500 9500 Total needed 15700 17900 20800 24600 29000 31500 99500 Less: Op.Inventory available 5000 5700 6500 7800 9000 11000 5000 Purchases needed 10700 12200 14300 16800 20000 20500 94500 Cost /unit 4 4 4.4 4.4 4.4 4.4 Purchases $ 42800 48800 62920 73920 88000 90200 406640 Cash purchases40% 17120 19520 25168 29568 35200 36080 162656 Credit purchases60% 25680 29280 37752 44352 52800 54120 243984 Total 42800 48800 62920 73920 88000 90200 406640 Payment for purchases Cash purchases40% 17120 19520 25168 29568 35200 36080 162656 Credit purchases60% 25920 25680 29280 37752 44352 52800 215784 Total payment for purchases 43040 45200 54448 67320 79552 88880 378440 4. Cash budget Jan-18 Feb Mar Apr May June Total Op. Balance 15000 11660 8272 3824 -2448 -100 15000 Add: Sales collections: 104200 106132 117400 137828 170140 210192 845892 Total Cash available 119200 117792 125672 141652 167692 210092 860892 Less: Disbursements: Payment for purchases 43040 45200 54448 67320 79552 88880 378440 Equipment 50000 40000 90000 Dividends 13000 13000 Salaries& Wages 3500 3500 3500 3500 3500 3500 21000 Sales commissions 8% *sales 8000 9120 10400 12480 15840 19360 75200 Rent 7000 7000 7000 7000 7000 7000 42000 Other variable exp. 5%*Sales 5000 5700 6500 7800 9900 12100 47000 Supplies expense 2000 2000 2000 2000 2000 2000 12000 Other cash OH exp. 21000 21000 21000 21000 21000 21000 126000 Total disbursements 139540 133520 117848 121100 138792 153840 804640 Surplus/Deficit -20340 -15728 7824 20552 28900 56252 56252 Add: Borrowings 32000 24000 56000 Less: Repayments 4000 23000 29000 56000 Ending Balance 11660 8272 3824 -2448 -100 56252 56252 Budgetded Income statement Sales Revenue 940000 Less: COGS 387440 Gross Profit 552560 Less: Operating expenses: Salaries& Wages 21000 Sales commissions 8% *sales 75200 Rent 42000 Other variable exp. 5%*Sales 47000 Supplies expense 12000 Other cash OH exp. 126000 Depreciation(25000*6) 150000 Bad debt exp. 20398 493598 Operating Income 58962 Less Dividends 13000 Net income 45962 Note: COGS Jan+feb (10000+11400)*4= 85600 Mar-June 68600*4.4= 301840 Total 387440

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.