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MBA642 Project 4




Question;Data Scenario;You have just been hired into a management position which;requires the application of your budgeting skills.;You find out that budgeting has not been a priority of the;company and that they have been experiencing cash shortages.;You have contacted various areas on the organization and;have accumulated the information below to assist you;in preparing a comprehensive budget.;Following is actual information relates to the operations of;a merchandiser named Sled Company, a;wholesaler of sleds as of March 31.;Cash $7,000;Accounts receivable 15,200;Inventory 22,960;Accounts Payable 22,000;Actual and Budgeted sales dollar Data-Sales Budget;March (actual) $38,000;April $41,000;May $42,000;June $40,000;July $43,000;Sales are following type: 65% Cash sales collected in month of sale;35% Credit sales collected in the following;month of sale;Credit sales are collected in the month following sale. The accounts receivable at March 31 are a;result of March credit sales.;Cost of goods sold equals 80% of sales price;At the end of each month, inventory is to be on hand equal;to;70% of following month's sales needs, stated;at cost.;Inventory purchases are paid 47% in month of purchase;53% in month after purchase;The accounts payable at March 31 are a result of March;purchases of inventory.;Monthly expenses are as follows and are paid in the month;incurred if it is a cash expense.;Salaries and wages 13% of sales dollar;Rent $2,500;per month;Other cash expenses 4% of sales dollar;Advertising $1,000;per month;Depreciation $900 for April only;Depreciation $1,000;per the months of May and June;Equipment purchased for cash;in May $2,000;Required;1. Prepare a Cash Receipts Budget for the quarter ending;June 30th, by month and quarter. See page 362;You do not need a formal sales budget since the sales budget;is above in the data.;2. Prepare a;merchandise purchase budget by month and quarter. A merchandiser purchases in dollars.;I have set up a formatted budget for you. You can see how I have made a few minor;changes to Schedule 2 on page 356, which;is a production budget which we are not preparing.;Make sure you think about the numbers you use in the quarter;column.;I am specifically talking about how you handle beginning and;ending inventory.;3. Prepare a Selling;and Administrative Expense Budget, by month and quarter. See page 361***;My budget is a little bit different than the one in the;text, because I used percentage of sales dollar.;4. Prepare a Cash;Disbursements Budget, by month and quarter. See;page 363***;5. Prepare a cash;budget showing the months and quarter.;Use the format I have provided on the budget sheet.;Do not worry about a minimum cash balance or financing;needs, since we are trying to develop a cash management plan.;6. Based on the;quarterly cash budget you prepared, do you have any recommendations;on cash management. Discuss the type of business and the;cash flow problems a company in this industry might have.;Type your answer on the budget worksheet, where I have set;out the question.;7. Prepare a budgeted;income statement for the quarter ending June 30, 20XX.;You do not need to;show monthly columns. I;entered Sales for you on the income statement;8. What do you think;about the survivability of this business?;9. What if the;company finds out the monthly rent will increase to $2,800, what budgets are;effected? Why?;What is the New Net income(Loss)?;If you have linked everything correctly, you should only;have to change the monthly rent;on this sheet to determine your answer to the questions;asked. Please change the rent back to;the original amount of 2,500 before you submit.


Paper#44093 | Written in 18-Jul-2015

Price : $39