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Instructions:
Budgeted Purchases of Inventory Assignment
Question in Accounting
Question Description
Quagmire Inc. has prepared the following sales budget for the quarter of April, May and June:
Sales Budget | ||||
April | May | June | Total | |
Sales in units | 12500 | 16000 | 14000 | 42500 |
Selling price per unit | x $50 | x $50 | x $50 | |
Sales revenue | $625000 | $800000 | $700000 | $2125000 |
All of the sales are on credit.
Quagmire collects from customers as follows:
45% of sales in the month of sale
35% in the month following the sale, and
20% in the second month following the sale.
Cash receipts budget | ||||
April | May | June | Total | |
Collect from current sales | 281250 | 360000 | 315000 | 956250 |
Collect from last month | 253750 | 218750 | 280000 | 752500 |
Collect from 2 mos. Prior | 135000 | 145000 | 125000 | 405000 |
Cash receipts | $ 670000 | $ 723750 | $ 720000 | $ 2113750 |
Quagmire expects cost of goods sold to be 30% of sales.
They keep 10% of next months expected cost of goods sold in ending inventory. Below are budgeted purchases of inventory.
All purchases are paid for in the SAME month as the purchase.
Purchases Budget | ||||
April | May | June | Total | |
Budgeted cost of goods sold | 187500 | 240000 | 210000 | 637500 |
plus desired ending inventory | 24000 | 21000 | 17250 | 17250 |
Total needs | 211500 | 261000 | 227250 | 654750 |
less beginning inventory | (18750) | (24000) | (21000) | (18750) |
Cost of purchases | 192750 | 237000 | 206250 | 636000 |
Below is the budget for variable and fixed selling and administrative expenses.
Selling and admin expenses are paid in the month AFTER they are incurred.
Fixed expenses include depreciation of 17250 each month.
Sales and Admin Budget | ||||
April | May | June | Total | |
Variable S&A expenses | 125000 | 160000 | 140000 | 425000 |
Fixed S&A (including depreciation) | 172500 | 172500 | 172500 | 517500 |
Quagmire has $152000 of cash on hand at he beginning of May.
Prepare a cash budget for May and June. (Use excel so that multiple attempts are easier.)
Compute the beginning balance in cash for June.
Hint: the answer is 358500. If you computed this correctly (it was your ending cash balance for May), you should be able to answer the next question too!
Compute the ending balance in cash for June.
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Budgeted Purchases of Inventory Assignment |
Budgeted Purchases of Inventory Assignment