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Chapter $10-$Budgeting Review Problem

Beisswanger Company is preparing a master budget for $2011.$ Relevant data pertaining to its sales and production budgets are as follows:

Sales for the year are expected to total $1,200,000$ units. Quarterly sales, as a percentage of total sales, are expected to be $20\%,25\%,30\%,$ and $25\%,$ respectively. The sales price is expected to be $$50$ per unit for the first three quarters and $$55$ per unit for the fourth quarter. Sales in the first quarter of $2012$ are expected to be $10\%$ higher than the budgeted volume for the first quarter of $2011.$

Of all sales, $10\%$ are cash sales and the remaining $90\%$ each quarter are credit sales. Of the credit sales, $50\%$ of the credit sales are collected in the same quarter as the sale, with $40\%$ collected the following quarter, and $10\%$ is deemed to be uncollectible. The Accounts Receivable Balance at $1/1/11$ was $$200,000$ before uncollectible accounts were written off.

Management desires to maintain an ending finished goods inventory each quarter at $25\%$ of the next quarter's budgeted sales volume. Each unit is purchased from the vendor at $$10$ per unit, and all are purchased on credit.

Of the inventory purchased each quarter, $60\%$ of the credit purchase is paid for within the same quarte and $40\%$ is paid by the following quarter. The balance in accounts payable as of $\frac{1}{1}\frac{?}{11}$ was $$75,000.$

Prepare a sales and cash collections budget for $2011.$

Prepare a purchases and cash disbursements budget for $2011.$

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