Window Help Ch 8 Connect Budget problem narrative.pdf (page 1 of 2) Q Search CASE 9-30 Master Budget with Supporting Schedules [L02, LO4, LO8, LO9, Lo1 You have just beea hired as a new management traisee by Earrings Unlimited, a distributor of earrings to various retail oulets located in shopping malls across the country. In the past, the com pany has done very litle in the way of budgeting and at certain times of the year has experienced a shortage of eash Since you are we'll trained in bodgeting, you have decided to prepare comperebensive budgets for the spooming second quarter in order to show managemeet the benefits dhat can be gained from an integrated budgeting program. To this end you bave worked with accounting and other areas to gather the information assembled below The company sells many styles of earrings, but all are sold for the same price-$10 per pair Actal sales of earrings for the last three mouths and budgeted sales for the next six mooths follow in pairs of earrings): January (actual) February (actual) 26 March (actual). April (budget May (budge...1 20,000 Jne (budget 26,000 July (budget 40,000 August(oudget 65,000 September (budget). 100,000 50,000 30,000 28,000 25,000 The concentration of sales before and during May is due to Mother's Day Sufficieot inveatory should beonhand at the end of each month to spply 40% of the eamngs old in the folong more Suppliers are paid $4 for a pair of earrings One-half of a month's purchases is paid for in the mooth of purchase; the other half is paid for in the following monoth. All sales are on credit, with no dicont,ed payable witha iSdays. The company has found, however, that only 20% of a sati ales are collected inthsonth of sale. Aaadional 10% as collec ed in the following sat ind second trith fol wing sale. Bad debts have boen lipble. the remaning 10% is collend in the company are given below Variable: Sales commissions Flxed 4% of sales ..$200,000 $18,000 $106,000 $7,000 $3,000 $14,000 Utities