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Chapter 22: Q3TI (page 1198)

11. Kendall Company projects 2019 first quarter sales to be $10,000 and increase by 5% per quarter. Determine the projected sales for 2019 by quarter and in total. Round answers to the nearest dollar.

12. Friedman Company manufactures and sells bicycles. A popular model is the XC. The company expects to sell 1,500 XCs in 2018 and 1,800 XCs in 2019. At the beginning of 2018, Friedman has 350 XCs in Finished Goods Inventory and desires to have 10% of the next year鈥檚 sales available at the end of the year. How many XCs will Friedman need to produce in 2018?

Short Answer

Expert verified

11. The total sales for the yearare$43,101.25

12. The budgeted XC鈥檚 to be producedare1,330 Units.

Step by step solution

01

Meaning of Budget  

The term budget refers to estimating the activities to be performed in the future for better growth. The budget can be related to how many units we will sell in the future and the costs. It gives us a goal to achieve effectively and efficiently.

02

Calculation of projected sales for 2019 by quarter and in total

Particulars

Amount ($)

Sales of quarter 1

$10,000

Sales of quarter 2($10,000+5%)

10,500

Sales of quarter 3($10,500+5%)

11,025

Sales of quarter 4($11,025+5%)

11,576.25

Total Sales

$43,101.25

03

Preparation of production budget

Particulars

2018 (Units)

Budgeted XC鈥檚 to be sold

1,500

Add: Desired XC鈥檚 in ending inventory (1800脳10%)

180

Total XC鈥檚 needed

1,680

Less: XC鈥檚 in beginning inventory

(350)

Budgeted XC鈥檚 to be produced

1,330

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Most popular questions from this chapter

Crowley Company projects the following sales:

January February March

Cash sales (25%) \( 5,000 \) 5,500 \( 6,000

Sales on account (75%) 15,000 16,500 18,000

Total sales \) 20,000 \( 22,000 \) 24,000

Crowley collects sales on account in the month after the sale. The Accounts Receivable balance on January 1 is \(13,500, which represents December鈥檚 sales on account. Crowley projects the following cash receipts from customers:

January February March

Cash receipts from cash sales \) 5,000 \( 5,500 \) 6,000

Cash receipts from sales on account 13,500 15,000 16,500

Total cash receipts from customers \( 18,500 \) 20,500 $ 22,500

Recalculate cash receipts from customers if total sales remain the same but cash sales are only 20% of the total.

Preparing a financial budget鈥攂udgeted balance sheet

Use the following June actual ending balances and July 31, 2018, budgeted amounts for Omas to prepare a budgeted balance sheet for July 31, 2018.

a. June 30 Merchandise Inventory balance, \(17,770

b. July purchase of Merchandise Inventory, \)4,400, paid in cash

c. July payments of Accounts Payable, \(8,400

d. June 30 Accounts Payable balance, \)10,700

e. June 30 Furniture and Fixtures balance, \(34,100; Accumulated Depreciation balance, \)29,880

f. June 30 total stockholders鈥� equity balance, \(28,020

g. July Depreciation Expense, \)500

h. Cost of Goods Sold, 60% of sales

i. Other July expenses, including income tax, \(2,000, paid in cash

j. June 30 Cash balance, \)11,600

k. July budgeted sales, all on account, \(12,600

l. June 30 Accounts Receivable balance, \)5,130

m. July cash receipts from collections on account, $14,700

(Hint: It may be helpful to trace the effects of each transaction on the accounting equation to determine the ending balance of each account.)

What are the budgeted financial statements? How do they differ from regular financial statements?

Preparing an operating budget鈥攕elling and administrative expense budget

Consider the sales budget presented in Exercise E22-31. Slate鈥檚 selling and administrative expenses include the following:

Rent, \(2,000 per month

Salaries, \)4,000 per month

Commissions, 5% of sales

Depreciation, $1,000 per month

Miscellaneous expenses, 2% of sales

Prepare a selling and administrative expense budget for each of the three quarters of 2018 and totals for the nine-month period.

Match the following statements to the appropriate budgeting objective or benefit: developing strategies, planning, directing, controlling, coordinating and communicating, and benchmarking.

1. Managers are required to think about future business activities.

2. Managers use feedback to identify corrective action.

3. Managers use results to evaluate employees鈥� performance.

4. Managers work with managers in other divisions.
See all solutions

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