Prepare a sales budget for bigelow company


Assignment:

Bigelow Company has just begun business and needs to generate a sales forecast (in units) for their first quarter of operations. The numbers below represent monthly sales forecast for the bigelow company.

Jan. 50,000
Feb. 40,000
March 80,000

ADDITIONAL INFORMATION

a. Ending finished goods inventory should be equal to one half of next month's sales projection.

b. Each unit requires 3 pounds of material at a cost of $5 per pound.

c. Labor cost is $10 per unit produced.

d. Ending raw material inventory should be equal to twenty percent of next months material requirement.

e. Factory overhead is $25,000 per month of which $10,000 is for depreciation.

f. All costs are paid in the month incurred except purchases which are paid in the following month.

g. Selling Price per unit is $50. All sales are on account with collections estimated at 10% in the month of sale, 60% the month following the sale, 25% the second following month and 5% are uncollectable.

h. Bigelow began the business with $50,000 in cash and requires an ending cash balance of at least $5,000. Bigelow can borrow money from a local bank in $1,000 increments at an interest rate of 1% per month.

REQUIRED:

1. Prepare a sales budget for Jan. through March

2. Prepare a production budget for Jan. through March.

3. Prepare a purchases budget for Jan. through March.

4. Prepare a cash budget for Jan. through March.

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Accounting Basics: Prepare a sales budget for bigelow company
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