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Master Budget Addams Company, a merchandising firm that sells one product, estimates it will sell 12,000 units of its product at $60 per unit in
Master Budget
Addams Company, a merchandising firm that sells one product, estimates it will sell 12,000 units of its product at $60 per unit in December.
In November, the company prepared other information to show budget for December, as shown here:
Merchandise inventory, December 1:2,000 units
Desired merchandise inventory for December 31: 3,000 units
Cost per unit of merchandise purchases: $40
Selling and administrative expenses: $200,000
Cash balance, December 1: $30,000
November sales: $600,000
- The company estimates that 60% of each month's sales are collected in the month of sale and that the remaining 40% is collected in the month after sale.
- The $200,000 of selling and administrative expenses includes $40,000 of depreciation.
- The company pays for half of the merchandise purchases during the month of purchase and pays the remainder during the month following purchase. Estimated merchandise purchases for November are $340,000.
- All other out-of-pocket expenses are paid for in cash.
Please answer the following:
- How many units of merchandise will Addams budget to purchase in December?What is the dollar amount of Addams' budgeted merchandise purchases for December?
- Show budgeted income statement for the month ended December for Addams Company.
- Show statement of estimated cash flows for the month ended December for Addams Company.
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