A master budget is a formal planning tool used to chart the organization's future. Compiling a master budget serves to provide the financial information needed to make decisions, choose strategies, and create action plans. A master budget also helps to communicate the organization's expenses to all employees. Instructions This assessment has two parts. Part A For Part A, use the Master Budget Preparation Template [XLSX]. Based on the data in the template, which represents a company's estimated balance sheet, prepare a complete master budget. Part B For Part B, use the Master Budget Preparation Template [XLSX]. Based on the data in the template, complete the problems on flexible budget preparation and computation of materials. Note B: Cash payments for merchandise Crouch Corp. Budgeted Income Statement For Three Months Ended M arch 2018 Crouch Corp. Budgeted Balance Sheet March 31, 2018 A c D E F GH MN 0 Crouch Corp. General and Administrative Expenses Budget January, February, and M arch 2018 January February March Total Depreciation expense calculations Annual Depreciation Expense January February March Total Crouch Corp. Capital Expenditures Budget January, February, and M arch 2018 January February March Crouch Corp. Cash Budgets January, Fe bruary, and M arch 2018 January February March Supporting calculations February March Total Note A: Cash receipts from customers January B C D E P Q Crouch Corp. Sales Budgets January, Fe bruary, and M arch 2018 Budgeted Budgeted Budgeted Units Unit Price Total Dollars Crouch Corp. Merchandise Purchase Budgets January, February, and M arch 2018 January F February March Total Crouch Corp. Selling Expenses Budget January, February, and M arch 2018 January February March Total Crouch Corp. General and Administrative Expenses Budget January, February, and M arch 2018 January February March Total Depreciation expense calculations Annual Depreciation Expense January February March Total Crouch Corp. Capital Expenditures Budget January, February, and M arch 2018 January February March Crouch Corp. Cash Budgets January, Fe bruary, and M arch 2018 January February March BUS-FPX4061 - Managerial Accounting Principles Assessment 8: Master Budget and Flexible Budget Preparation Worksheet Part A Solve the given problem based on the following scenario. The managers of Crouch Corp. need you to create the master budget for the months of January, February, and Mar Use the following data to prepare the master budget. A single product of Crouch Corp. can be purchased for $25 per unit and resold for $50 per unit. The anticipated inventory level on December 31,2017 , is 2,500 units. This is actually more than its desired level for 2018 , which is 20% of January's projected sales (in units). Projected sales are: - 5,250 units for January - 6,750 units for February - 8,250 units for March - 7,500 units for April The total sales consists of 25% cash sales and 75% credit sales. 60% of credit sales is collected in the first month after the sale, and 40% is collected in the second month after the sale. $112,500 of the accounts receivable balance for December 31,2017, is collected in January and $360,000 is collected in February. 20% of the payment for merchandise purchases is made one month after the purchase, and 80% is made in the second month. $72,000 of the balance of accounts payable for December 31,2017 , is paid in January, and $252,000 is paid in February. Salaries for salespersons average $45,000 per year. In addition to this, a sales commission equal to 20% of each salesperson's sales is paid on a monthly basis. Salaries for general administrative staff average $108,000 per year. Each month, $1,500 is paid for maintainance expenses. The December 2017 balance sheet reflects an equipment purchase in January 2017. Using the straight-line method, depreciation will occur over 8 years, with no salvage value. A full month's depreciation is recognized in the month in which the asset is purchased. The following new equipment purchases are projected for the next quarter: - $27,000 in vanuary - $72,000 in February - $21,600 in March The company has negotiated to purchase land for $112,500, which will be paid on the last day of March, in cash. Crouch Corp. has arranged an agreement with its bank to take additional loans as needed. The bank charges 12% interest per year. Crouch Corp. pays interest on the monthly beginning balance at the end of each month. The company may make full or partial loan payments on the last day of the month. According to this agreement with the bank, the minimum ending cash balance each month must be $18,750 The first quarter's income tax is paid on April 15 at a tax rate of 35%. Using the data provided, prepare the master budget for the first quarter of 2018, including all the following budgets: 1. Monthly sales budgets (showing both budgeted unit sales and dollar sales) 2. Monthly merchandise purchases budgets 3. Monthly selling expense budgets 4. Monthly general and administrative expense budgets 5. Monthly capital expenditures budgets \begin{tabular}{ccccc} \hline & & & \\ \hline Supporting calculations & January & February & March & Total \\ \hline Note A: Cash receipts from customers & & & \end{tabular} Note B: Cash payments for merchandise Crouch Corp. Budgeted Income Statement For Three Months Ended M arch 2018 Crouch Corp. Budgeted Balance Sheet March31,2018 C D E FGH JK LMN 0 PQ Crouch Corp. General and Administrative Expenses Budget January, February, and M arch 2018 January February March Total Depreciation expense calculations Annual Depreciation Expense January February March Total Crouch Corp. Capital Expenditures Budget January, February, and M arch 2018 January February March Crouch Corp. Cash Budgets January, February, and M arch 2018 January February March Supporting calculations January February March Total Note A: Cash receipts from customers $ Note B: Cash payments for merchandise Using the data provided, prepare the master budget for the first quarter of 2018 , including all the following budgets: 1. Monthly sales budgets (showing both budgeted unit sales and dollar sales) 2. Monthly merchandise purchases budgets 3. Monthly selling expense budgets 4. Monthly general and administrative expense budgets 5. Monthly capital expenditures budgets 6. Monthly cash budgets 7. Budgeted income statement for the entire first quarter (not for each month) BUS-FPX4061 - Managerial Accounting Principles Assessment 8: Master Budget and Flexible Budget Preparation Worksheet Part A Solve the given problem based on the following scenario. The managers of Crouch Corp. need you to create the master budget for the months of january, February, and M Use the following data to prepare the master budget. A single product of Crouch Corp, can be purchased for $25 per unit and resold for $50 per unit. The anticipated inventory level on December 31,2017 , is 2,500 units. This is actually more than its desired level for 2018 , which is 20% of January's projected sales (in units). Projected sales are: 5,250 units for January 6,750 units for February 8,250 units for March 7,500 units for April The total sales consists of 25% cash sales and 75% credit sales. 60% of credit sales is collected in the first month after the sale, and 40% is collected in the second month after the sale. $112,500 of the accounts receivable balance for December 31,2017 , is collected in January and $360,000 is collected in February. 20% of the payment for merchandise purchases is made one month after the purchase, and 80% is made in the second month. $72,000 of the balance of accounts payable for December 31,2017 , is paid in January, and $252,000 is paid in February. Salaries for salespersons average $45,000 per year. In addition to this, a sales commission equal to 20% of each salesperson's sales is paid on a monthly basis. Salaries for general administrative staff average $108,000 per year. Each month, $1,500 is paid for maintainance expenses. The December 2017 balance sheet reflects an equipment purchase in January 2017. Using the straight-line method, depreciation will occur over 8 years, with no salvage value. A full month's depreciation is recognized in the month in which the asset is purchased. The following new equipment purchases are projected for the next quarter: - $27,000 in lanuary - $72,000 in February The company has negotiated to purchase land for $112,500, which will be paid on the last day of March, in cash. Crouch Corp. has arranged an agreement with its bank to take additional loans as needed. The bank charges 12% interest per year. Crouch Corp. pays interest on the monthly beginning balance at the end of each month. The company may make full or partial loan payments on the last day of the month. According to this agreement with the bank, the minimum ending cash balance each month must be $18,750. The first quarter's income tax is paid on April 15 at a tax rate of 35%. Using the data provided, prepare the master budget for the first quarter of 2018 , including all the following budgets: 1. Monthly sales budgets (showing both budgeted unit sales and dollar sales) 2. Monthly merchandise purchases budgets 3. Monthly selling expense budgets 4. Monthly general and administrative expense budgets 5. Monthly capital expenditures budgets