Business Budget Project Bobcat Printing makes custom t - -- shirts and other promotional products for student organizations and businesses. It is beginning its first year of operations and needs to plan for its first quarter of operations. They would like to maximize their profits, and understand that accurate budgeting can help achieve that goal. The budgets will be prepared based on the following information:

a. Sales are budgeted at $ 20,000 for Month 1, $ 2 5,0 00 for Month 2, and $27 ,000 for Month 3. All sales will be d one on account. Company does not expect to have any cash sales.

b. Sales are collected 6 0% in the month of the sale, and 40% in the month following the sale.

c. Cost of Goods Sold is budgeted at 45 % of Sales.

d. Monthly selling, general, and administrative expenses are as follows: donations are 10% of sales; advertising is 3% of sales; miscellaneous is 1% of sales; and rent is $5,000 per month. All SG&A expenses are paid in the month they are incurred.

e. Since all of the orders are custom made, n o inventory is kept on hand at the end of the month.

f. Inventory purchases are paid in full in the month following the purchase.

g. Bobcat Printing is planning to purchase a building in Month 3 for $6 ,000 in cash.

h. They would like to maintain a minimum cash balance of $2,500 at the end of each month. The company has an agreement with a local bank that allows them to borrow, with a total line of credit of $20,000. The interest rate on these loans is 1% per month (12% annual) . They would as far as able, repay the loan on the last day of the month when it has enough cash to pay the full balance and maintain an adequate ending cash balance.

i. The owner makes a draw of $3 ,000 every month. (Note: sole proprietors and partnerships take owners draws, while stockholders receive dividends).

When making calculations always round up (for example: 33 7% = 2.31, round up to 3.00).

Check Figures: Gross Margin $39,6 00 Total assets $19,300 Ending Retained Earnings $5,507