Companies monthly operating expenses are given below:

Variable:

- Sales commission 1$ per lighter

Fixed:

- wages and salaries 22.000$

- Utilities 14.000$

- Insurance expired: 1.200$

- Depreciation 1.500$

- Miscellaneous 3000$

All operating expenses are paid during the month, in cash, with the exception :t depreciation and insurance expired. New fixed assets will be purchased during M for $25,000 cash. The company declares dividends of $12,000 each quarter, paysi.e in the first month of the following quarter. The company's balance sheet at March . is given be 1n The company can borrow money from its bank at 12 percent annual interest. A) borrowing must be done at the beginning of a month, and repayments must be made at the end of a month. Repayments of principal must be in round $1,000 amouns Borrowing (and payments of interest) can be in any amount. Interest is computed and paid at the end of each quarter on all loans outstanirs during the quarter. Round all interest payments to the nearest whole dollar. Compers interest on whole months (1/12,2/12, and so forth). The company wishes to use ar? excess cash to pay loans off as rapidly as possible. The company can borrow money from its bank at 12 percent annual interest. At borrowing must be done at the beginning of a month, and repayments must be made at the end of a month. Repayments of principal must be in round $1,000 amourzs Borrowing (and payments of interest) can be in any amount. Interest is computed and paid at the end of each quarter on all loans outstanes during the quarter. Round all interest payments to the nearest whole dollar. Comp-t interest on whole months (1/12,2/12, and so forth). The company wishes to use ar? excess cash to pay loans off as rapidly as possible. Prepare a master budget for the three-month period ending June 30 . Include ite following detailed budgets: 1. a. A sales budget by month and in total. b. A schedule of budgeted cash collections from sales and accounts recei:able, by month and in total. c. A purchases budget in units and in dollars. Show the budget by month anc in total. d. A schedule of budgeted cash payments for purchases, by month and ic total. 2. A cash budget. Show the budget by month and in total. 3. A budgeted income statement for the three-month period ending June 30 . Es: the contribution approach. 4. A budgeted balance sheet as of June 30 . Evaluating a Company's Budget Procedures Tom Emory and Jim Morris strolled back :. their plant from the administrative offices of Ferguson \& Son Mig. Company. ToI -29 Master Budget with Supporting Budgets You have just been hired as a new inanagement trainee by Quik-Flik Sales Company, a nationwide distributor of a revolutionary new cigarette lighter. The company has an exclusive franchise on distribution of the lighter, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given direct responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favorable impression on the president and have assembled the information below. The company desires a minimum ending cash balance each month of $10,000. The lighters are forecast to sell for $8 each. Recent and forecast sales in units are: The large buildup in sales before and during the month of June is due to Father's Day. Ending inventories are supposed to equal 90 percent of the next month's sales in units. The lighters cost the company $5 each. Purchases are paid for as follows: 50 percent in the month of purchase and the remaining 50 percent in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25 percent of a month's sales are collected by month-end. An additional 50 percent is collected in the month following, and the remaining 25 percent is collected in the second month following. Bad debts have been negligible