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Chapter 22: Q7RQ (page 1228)
What is a master budget?
A master budget isa set of almost every divisional budgetof a business entity.
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Question: One benefit of budgeting is coordination and communication. Explain what this means.
Using sensitivity analysis in budgeting
Refer to the Victors schedule of cash receipts from customers that you prepared in Short Exercise S22-15. Now assume that Victors鈥檚 sales are collected as follows:
40% in the month of the sale
20% in the month after the sale
39% two months after the sale
1% never collected
Prepare a revised schedule of cash receipts for January and February
Preparing an operating budget鈥攃ost of goods sold budget Butler Company expects to sell 1,650 units in January and 1,550 units in February. The company expects to incur the following product costs:
Direct materials cost per unit \( 85
Direct labor cost per unit 60
Manufacturing overhead cost per unit 55
The beginning balance in Finished Goods Inventory is 250 units at \)200 each for a total of $50,000. Butler uses FIFO inventory costing method. Prepare the cost of goods sold budget for Butler for January and February.
Using sensitivity analysis in budgeting
Refer to the Berry鈥檚 schedule of cash receipts from customers that you prepared in Short Exercise S22-9. Now assume that Berry鈥檚 sales are collected as follows:
60% in the month of the sale
20% in the month after the sale
18% two months after the sale
2% never collected
Prepare a revised schedule of cash receipts for January and February.
Preparing an operating budget鈥攕ales budget Brown Company manufactures luggage sets. Brown sells its luggage sets to department stores. Brown expects to sell 1,700 luggage sets for \(180 each in January and 2,050 luggage sets for \)180 each in February. All sales are cash only. Prepare the sales budget for January and February.
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