Description
Case Study 2 Spring 2 2020 Master Budgeting and Pro-Forma Financial Statements
You have just been assigned to a new manager who believes you have exceptional budgeting skills. Since you began your job last summer, you have been showing management your latest spreadsheets and how you use your new-found knowledge of Managerial Accounting to make sound business decisions. Your new manager is responsible for the nationwide distribution of the newly developed Personal Protection Device (PPD), using an ultrasonic sound emission and an amazing 25,000 lumen LED flashing light. Through multiple franchise agreements, sales have grown very rapidly, and the timing is right for you to join her team and to show your skills. You have just been given responsibility for all planning and budgeting of the entire PPD division. Your first assignment is to prepare a master budget for the next three months, starting April 1, 2019. You accept this responsibility with enthusiasm, and you are anxious to impress your new manager and the president of the company, who has a very high regard for you. To commence your new role, you have assembled the following pertinent information:
Note: The company desires a minimum ending cash balance each month on $15,000. The PPD’s are sold to retailers for $18 each and they are flying off the shelves. Recent forecasted sales in units are provided below: January (actual) | 20,000 | June | 50,000 |
February (actual) | 24,000 | July | 40,000 |
March (actual) | 28,000 | August | 36,000 |
April | 38,000 | September | 32,000 |
May | 65,000 |
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Explanation & Answer
Attached.
Running head: MASTER BUDGET AND PRO-FORMA STATEMENTS
Master budget and Pro-forma statements
Name
Institution
1
MASTER BUDGET AND PRO-FORMA STATEMENTS
2
1. Sales budget
sales budget for the quarter ending 30th June
month
April
May
June
total for quarter
budgeted sales
38000
65000
50000
153000
selling price
$
total sales
$ 684,000.00
18.00
2. Cash collections by month
$
$
18.00
1,170,000.00
$
18.00
$ 900,000.00
$
2,754,000.00
MASTER BUDGET AND PRO-FORMA STATEMENTS
3
sales budget for the quarter ending 30th June
month
budgeted sales
April
May
June
total sales
38000
$
$
18.00
18.00
$
$
684,000.00
1,170,000.00
collections made that month(25%)
$
171,000.00
$
292,500.00
$
342,000.00
$
225,000.00
$
585,000.00
$
171,000.00
$
171,000.00
$
634,500.00
$
981,000.00
selling price
collections made next month (50%)
collections made in the third month
(25%)
total cashcollected by month from sales
65000
total for quarter
50000
153000
$
18.00
$
900,000.00
$
2,754,000.00
$
1,786,500.00
sales budget for the quarter ending 30th June
month
budgeted sales
selling price
total sales
collections made that month(25%)
collections made next month (50%)
April
May
38000
June
65000
total for quarter
50000
153000
$
18.00
$
684,000.00
$
18.00
$
1,170,000.00
$
18.00
$
900,000.00
$
171,000.00
$
292,500.00
$
$
225,...