XYZ Company, who prepares its master budget on a quarterly basis.Mike Delanoe, the production manager, approached Sara Jones, the controller.He told her that he was currently struggling with finances at home due to a recent renovation.He reminded her that 80% of his bonus was directly tied to the performance of the company compared with budget.He hinted that it would be beneficial if she was able to ensure that in 2020 he exceed budgeted expectations.

Sara Jones, the controller, is in charge of preparing the master budget.It is a participative budget where she receives input from all levels. The following data have been assembled to assist in preparing the master budget for the first quarter:

a.As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances:

January February March Quarter Cash sales .... $ 80,000 Credit sales ... 224,000 Total cash collections . $304,000\fJanuary February March Quarter Budgeted cost of goods sold $240,000* $360,000 Add desired ending inventory 90,0oot Total needs . .... . . . . 330,000 Less beginning inventory 60,000 Required purchases ... ... $270,000 *$400,000 sales x 60% cost ratio = $240,000. 1$360,000 x 25% = $90,000.January February March Quarter December purchases .. . .. $ 93,000 $ 93,000 January purchases ... 135,000 135,000 270,000 February purchases . ... March purchases .... Total cash disbursements for purchases ..... $228,000