htt low/connect.html You have just been hired as a new management trainee by Ear
ID: 2551575 • Letter: H
Question
htt low/connect.html You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very ittle in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembied below The company sells many styles of earrings, but all are sold for the same price-$14 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings) January (actunl) Tebruary tactual) 27.00 Jely (badget) March (ectual) April (budget) Hay (budget) 21,600 June (budget) 1,600 1,600 August (budget) 66,60 Septenber (budget) 26.600 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% ofthe earrings sold in the folowing month. Suppliers are peid $4.80 for a pair of earings. One-haif of a month's purchases is paid for in the month of purchase; the other haif bs paid for inthef low ng month. All sales are on credit Only 20% of a month's sales are colected ite month of sale. An addional 70% is colected in the following month, ond the remonng 10% is collected in the second month tol wing sale. 0ad debts have been Monthly operating expenses for the company are glven below s 20,000 2a8,o 22,900 2 0Explanation / Answer
1a. Sales Budget:
1b. Schedule of Expected Cash Collections:
1c. Earrings Unlimited
Merchandise Purchase Budget
1d. Earrings Unlimited
Budgeted Cash Disbursements for Merchandise Purchases
April May June Quarter Budgeted Unit Sales 66,600 101,600 51,600 219,800 Selling Price per Unit $ 14 $ 14 $ 14 $ 14 Total Sales $ 932,400 $ 1,422,400 $ 722,400 $ 3,077,200Related Questions
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