California Surfing Company

California Surfing, a merchandiser for surf boards is beginning its sales operations on January 1, 2019. The selling price for each board is $50. Expected sales, in units, are: January 500, February 600, March 700, April 800. 20% of customers purchase on credit, and they are given a credit of two months.

The cost price of each board is $10. California Surfing has negotiated credit terms with its vendors for 30 days. The company wishes to maintain an ending inventory each month equaling 30% of next month's sales.

The following are the expenditures per month:

Rent $2000 90% selling, 10% general

Utilities $500 60% selling

Salaries $5000 70% selling

Depreciation$1000 50% selling

Advertising $500

Commission$5 per board

The company plans to prepay the rent for the entire first quarter in January. Salaries and Advertising are paid in the month in which they are incurred. All the other expenses are paid the following month, except commission, which is paid after 2 months. Dividends $ 500 are paid each month.

The beginning cash balance for January is $50,000. California Surf Board wishes to maintain a cash balance of at least $5,000 each month and can borrow funds if necessary.

Prepare the Master Budget for the 1st Quarter. Additionally, prepare the budgeted income statement and the CVP income statement for the 1st quarter.

Your Master Budget must be prepared on an Excel Spreadsheet. Each budget/statement should be on a different worksheet, which should be named appropriately. The first sheet should be aKey Information Sheet. All the worksheets should be 100% sensitive with respect to the numbers (except the key information sheet). (NO NUMBERS SHOULD BE TYPED IN THE WORKSHEETS, EXCEPT THE KEY INFORMATION SHEET).

DUE DATE:

A. Emailthe Excel FileMonday May 4th

It is an Individual Projectyou may not consult with your peers for the answers.

I will answer your queries in class ONLY.Please do not leave for the last minute.