A retail chain prepares a master budget: Sales revenue $2,000,000, variable costs $800,000, fixed costs $400,000, expected cash collections $1,800,000.

• Requirements:
  • Prepare a master budget including budgeted income statement and cash flow statement.
  • Calculate the budgeted contribution margin and net income.
  • Analyze budget variances and recommend corrective actions.
  • Discuss how budgeting facilitates financial planning and control.
  • Evaluate the impact of economic factors on budgeted performance and profitability.