Page 1 of 2 You have just been hired as a new management trainee by Sneeques Inc., a distributor of low-cost sneakers to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. ......... Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming first quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of sneakers but all are sold for the same price- $22.00 per pair. Actual sales of sneakers for the last three months and budgeted sales for the next six months follow (in pairs of shoes): October (actual) 35,000 March (budget) November (actual) 27,000 April (budget) December (actual) 51,000 May (budget) January (budget) 49,000 June (budget) February (budget) 68,000 62,000 50,000 45,000 36,000 Sufficient inventory should be on hand at the end of each month to supply in the following month. 15.0% of the shoes sold The Company pays suppliers $ 14.50 for a pair of shoes. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found sales are collected as follows: 37% of a month's sales are collected in the month of sale 53% is collected in the following month 10% is collected in the second month following sale Monthly operating expenses for the company are given below: Variable: Fixed: Sales Commissions Advertising Rent Salaries Utilities Insurance Depreciation 7% of sales $79,000 $53,000 $101,000 $8,000 $9,000 $16,000 Insurance is paid on an annual basis, on August 1st of each year. ZOOM + ---------