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.

Question:

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. 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 24 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 $ 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 02 2100 Q3 2400 94 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 11385 173225 2018 8175 137145 3 2 ? 3 ! 2019 3 3 $ 2 1 2 3 ! 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 3 2 ? 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 Q3. 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 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. . 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 24 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 $ 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 02 2100 Q3 2400 94 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 11385 173225 2018 8175 137145 3 2 ? 3 ! 2019 3 3 $ 2 1 2 3 ! 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 3 2 ? 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 Q3. 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 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