CBH Company
CBH Company sells bicycles that they buy from various manufacturers. They are in the process of preparing
a Master Budget including the Sales Budget, The Purchasing Budget, the Cash Budget and the Income Statement
for 2022. The yearly budget is broken into quarters. The year end is December 31st.

Q1)

Q2)

Q3)

Q4)

5 5 3 Average estimated selling price per electric bike $860 There are 3,360 bicycles in Bike Inventory at the end of 2021 with a value of $ 560,000 At the end of each quarter, CBH Company wishes to have 120% of next quarters estimated sales units in Bike Inventory. At the end of 2022 assur 2,000 bikes are required in ending inventory . For each quarter, it is estimated that 75% of sales will be cash and 25% will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the following quarter. Credit sales from Q4 2021 were $430,000 Assume operating expenses occur evenly throughout the year and are all paid in cash. For each quarter, 70% of Bike purchases are paid for in cash in the quarter of the purchase and 30% are paid in the following quarter. Total bike purchases in Q4 2021 were $510,000 The expected average purchase price of a bike in 2022 is S650 CBH Company will pay $60,000 in dividends in Q4 2022. The cash balance in the bank at the end of 2021 S 10,000). CBH Company wishes to maintain a minimum cash balance of $10,000 in the bank for each quarter. Budgeted 2022 sales volumes in units for each quarter are: Q1 2800 Q2 2100 Q3 3300 Selling and Administration expenses for the budgeted year are as follows; Sales Wages: Sales wages are a mixed cost (salary and commissions). CBH Company plans on estimating these costs for 2022 based on actual historical data using the high-low method. Here are the total sales in units and the total sales wages expense for the last 4 years. Units sold 2021 12585 135130 2020 12905 159975 2019 2018 137145 5 2400 94 1 $ 5 173225 11385 8175 3 1 Fixed Costs: Accounting & professional services Administrative Salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs $ 1800 77000 9000 4200 35000 2300 1400 1200 500 20000 3000 155400 1 CBH Company will purchase a new store on 1/1/2022 worth $ 500,000 to be be paid for in 2 equal payments. The first payment will be in Q1 and the second in 03. Taxation is 30 % on taxable income and paid at the end of Q4 each year. For Cost of Sales (COS): Add total purchases + Beginning Bike Inventory - Ending Bike Inventory. Interest expense for a quarter is calculated based on the loan balance at the end of the previous quarter and is calculated based on an annual rate of 5.00% The loan balance at the end of 2021 was $ 78,000 3 $ Cost of Sales Purchases during the year Beginning Bike Inventory Less: Ending Bike Inventory Cost of Goods Sold Analysis of Sales Wages Using the High-low Method: Variable Component (per unit sold) Fixed Component --> total for the year Quarter 2 Quarter 3 Quarter 4 Year Selling and Administrative Expense Budget Quarter 1 Budgeted Sales in units: Variable Cost: Sales Wages Total Variable Costs: Fixed Costs: Accounting & professional services Administrative salaries Sales Wages - fixed portion Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs: Total costs: $ $ Cash Total per quarter: Note: Deduct Depreciation. Budgeted Income Statement for year ended 31st December 2022 $ Sales Cost of sales Gross profit Selling and Administration expenses Operating Income Interest expense Net Income before taxation Income tax expense Net Income after tax 4. 5 6 6 4 Year 7 8 9 9 10 11 12 13 14 15 16 CASH BUDGET for the year ending 31st December 2022 1 2 3 Beginning cash balance Add: Receipts Collections from Customers Total receipts: Total available cash: Less: Disbursements Bike Purchases Selling and Administrative expenses Purchase of new store Income Tax expense Dividends Total disbursements: Excess (deficiency) of available cash over cash disbursements Financing Previous period borrowings Interest Costs Excess (deficiency) after interest payment Amount available to pay down loan Add: Current period borrowings Less: Repayments Ending cash balance 17 18 19 20 21 22 23 24 without considering $10,000 minumum 25 26 considering $10,000 minimum balance 27 28 29 30 Notes: Minimum cash balance: $10,000 Interest on loan to be paid in each quarter based on the loan balance of the previous quarter. Taxation amount taken from the Income Statement 31 32 33 5 5 3 Average estimated selling price per electric bike $860 There are 3,360 bicycles in Bike Inventory at the end of 2021 with a value of $ 560,000 At the end of each quarter, CBH Company wishes to have 120% of next quarters estimated sales units in Bike Inventory. At the end of 2022 assur 2,000 bikes are required in ending inventory . For each quarter, it is estimated that 75% of sales will be cash and 25% will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the following quarter. Credit sales from Q4 2021 were $430,000 Assume operating expenses occur evenly throughout the year and are all paid in cash. For each quarter, 70% of Bike purchases are paid for in cash in the quarter of the purchase and 30% are paid in the following quarter. Total bike purchases in Q4 2021 were $510,000 The expected average purchase price of a bike in 2022 is S650 CBH Company will pay $60,000 in dividends in Q4 2022. The cash balance in the bank at the end of 2021 S 10,000). CBH Company wishes to maintain a minimum cash balance of $10,000 in the bank for each quarter. Budgeted 2022 sales volumes in units for each quarter are: Q1 2800 Q2 2100 Q3 3300 Selling and Administration expenses for the budgeted year are as follows; Sales Wages: Sales wages are a mixed cost (salary and commissions). CBH Company plans on estimating these costs for 2022 based on actual historical data using the high-low method. Here are the total sales in units and the total sales wages expense for the last 4 years. Units sold 2021 12585 135130 2020 12905 159975 2019 2018 137145 5 2400 94 1 $ 5 173225 11385 8175 3 1 Fixed Costs: Accounting & professional services Administrative Salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs $ 1800 77000 9000 4200 35000 2300 1400 1200 500 20000 3000 155400 1 CBH Company will purchase a new store on 1/1/2022 worth $ 500,000 to be be paid for in 2 equal payments. The first payment will be in Q1 and the second in 03. Taxation is 30 % on taxable income and paid at the end of Q4 each year. For Cost of Sales (COS): Add total purchases + Beginning Bike Inventory - Ending Bike Inventory. Interest expense for a quarter is calculated based on the loan balance at the end of the previous quarter and is calculated based on an annual rate of 5.00% The loan balance at the end of 2021 was $ 78,000 3 $ Cost of Sales Purchases during the year Beginning Bike Inventory Less: Ending Bike Inventory Cost of Goods Sold Analysis of Sales Wages Using the High-low Method: Variable Component (per unit sold) Fixed Component --> total for the year Quarter 2 Quarter 3 Quarter 4 Year Selling and Administrative Expense Budget Quarter 1 Budgeted Sales in units: Variable Cost: Sales Wages Total Variable Costs: Fixed Costs: Accounting & professional services Administrative salaries Sales Wages - fixed portion Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs: Total costs: $ $ Cash Total per quarter: Note: Deduct Depreciation. Budgeted Income Statement for year ended 31st December 2022 $ Sales Cost of sales Gross profit Selling and Administration expenses Operating Income Interest expense Net Income before taxation Income tax expense Net Income after tax 4. 5 6 6 4 Year 7 8 9 9 10 11 12 13 14 15 16 CASH BUDGET for the year ending 31st December 2022 1 2 3 Beginning cash balance Add: Receipts Collections from Customers Total receipts: Total available cash: Less: Disbursements Bike Purchases Selling and Administrative expenses Purchase of new store Income Tax expense Dividends Total disbursements: Excess (deficiency) of available cash over cash disbursements Financing Previous period borrowings Interest Costs Excess (deficiency) after interest payment Amount available to pay down loan Add: Current period borrowings Less: Repayments Ending cash balance 17 18 19 20 21 22 23 24 without considering $10,000 minumum 25 26 considering $10,000 minimum balance 27 28 29 30 Notes: Minimum cash balance: $10,000 Interest on loan to be paid in each quarter based on the loan balance of the previous quarter. Taxation amount taken from the Income Statement 31 32 33