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You have just been hired as a management trainee by Delta Sales Company, a nationwide distributor of a designer's silk ties. The company has an
You have just been hired as a management trainee by Delta Sales Company, a nationwide distributor of a designer's silk ties. The company has an exclusive franchise on the distribution of the ties, 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 responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 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 $ The price per unit is $ Recent and forecasted sales units Bicycles are as follows:
tableMonth Actual,Month Planned Month,Planned,,January April,July,February May, August,March June,September,
The large buildup in sales before and during June is due to Father's Day. Ending inventories are supposed to equal of the next month's sales. The cost of sales is expected to be of the monthly sales.
Purchases are paid for as follows: in the month of purchase and the remaining in the following month. The company has found, however, that of a month's sales are collected by monthend. An additional is collected in the following month.
The company's monthly operating expenses are given below:
Variable: Sales commissions of sales
Fixed: Wages and salaries $
Utilities
Insurance
Depreciation
All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. The company's balance sheet at March is given below:
tableAssetsLiabilities & Stockholders' Equity,Cash$Notes payable,$
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