1 Sales Budget, Cash collection Budget and Production Budget

XYZ Company has provided the following information for the preparation of one part of the budget of the year ended December 31, 2022.

a) The Company will sell the under mentioned quantities in each quarter of 2022 1st Quarter 600 items 2nd Quarter 900 items 3rd Quarter 1200 items 4th Quarter 1350 items

b) The selling price of each item will be $100.00

c) It is estimated that 70% of the quarterly sales will be collected in the same quarter and the remaining 30% of sales will be collected in the following quarter

d) The Company started the year 2022 with $20,000.00 and it is assumed this will be collected in the 1st quarter of 2022.

e) The Companys production budget is based on the budgeted sales and scheduled as follows:

i- The Co will keep 20% of the following months quarter sales as safety stock (Inventory) for each quarter.

ii- It is assumed that beginning inventory in the 1st quarter will be 200 units and ending inventory is estimated to be 300 units.

Required: Prepare the Sales Budget and its Estimated Cash Collection from Sales of each quarter and the production budget of each quarter for the year ended December 31, 2022.

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2) Cash Budget

Based on the above information and taking the following additional data prepare the XYZ Company will prepare a Cash Budget (Hint: Use the cash collection estimate from the above computation)

a) The Estimated cash disbursement for suppliers will be $10000, 12000,15000 and 30000 for each quarter respectively.

b) The Company estimated the Wages payments to be $8000, 9000,11500, and 15000 for each quarter respectively.

c) The Overhead Costs are estimated to be $5000, 6500, 6000, and 10000 for each quarter respectively.

d) The Selling & Administration budget is estimated to be 6000, 6500, 7000, and 9000 for each quarter respectively.

e) The cash is set to be $20,000 at the beginning and there is a plan to buy an equipment (Capital expenditure) costing $65,000 in the 3rd quarter.

Required: Prepare the Cash Budget of XYZ Company for the year ended December 31, 2022

3) Match the phrases in Part A with Part B phrases

Part A ---------------------------------------------------Part B ___DuPont Model -----------------------1) Dividing EBIT to Interest expense ___Interest Cover -----------------------2) Debt to Equity Ratio ___Working Capital -----------------------3) Operation efficiency * Asset efficiency ___Asset Turnover Ratio ----------------------- 4) Current Assets less Current Liabilities ___Leverage Ratios ------------------------ 5) Sales over total assets