Solution Guide on Short Term Budgeting Activity

1.

Cost of goods Ending

Projected sales Gross profit (40%) sold inventory TGAFS
January 60,000.00 24,000.00 36,000.00 11,250.00
February 75,000.00 30,000.00 45,000.00 12,000.00
March 80,000.00 32,000.00 48,000.00
Total projected sales 215,000.00

Inventory, beginning 11,250.00

Purchases 45,750.00 workback
TGAFS 57,000.00
Inventory, ending 12,000.00
COGS 45,000.00

2.

February March April May

Projected Cash credit collectio collectio collectio collectio June
sales sales sales n n n n collection
February 10,000.00 3,000.00 7,000.00 2,800.00 3,850.00
March 9,000.00 2,700.00 6,300.00 2,520.00 3,465.00
April 8,000.00 2,400.00 5,600.00 2,240.00
May 10,000.00 3,000.00 7,000.00
June 11,000.00 3,300.00 7,700.00
credit collection for
Total sales 48,000.00 May 5,705.00
cash collection for
May 3,000.00
Total collection 8,705.00

3.

Sales Collections Purchases Payment

January February January February
35,000.0 21,000.0 6,000.0 24,000.0
January 0 14,000.00 0 30,000.00 0 0
55,000.0 22,000.0
February 0 0 40,000.00 8,000.00
Cash 43,000.0 6,000.0 32,000.0
collection 14,000.00 0 0 0

February 43,000.0
collection 0
32,000.0
February payment 0
Payment of Operating exp 9,000.00
Increase in cash balance 2,000.00
Problem 1

Sales forecast COGS Computation

Mercha
Merchandise Inv. ndise
Beg Purchases TGAFS Inv, end COGS
July 1,235,000. 380,000.00 1,050,000.00 1,430,000 480,000 950,000.0 (sales/130
 00 .00 .00 0 %)
1,560,000. 1,840,000 640,000 1,200,000.
August 00 480,000.00 1,360,000.00 .00 .00 00
Septembe 2,080,000. 1,600,000.
r 00 640,000.00 00
4,875,000. 3,750,000.
Total 00 1,500,000.00 00

Problem 2

Projected sales 3,500,000.00

COGS 2,205,000.00 (workback) 4
Gross Margin 1,295,000.00
Estimated S & A Expenses 875,000.00 (3,500,000 * 25%)
Projected income before tax 420,000.00 (3,500,000 * 12%)

Raw materials beginning 220,000.00

Purchases 747,500.00 workback 5
RMAFU 967,500.00
Raw materials, ending 270,000.00
RMU 697,500.00
DL
1,627,500.00
FOH
TMC 2,325,000.00
WIP, beginning 250,000.00
TGPIP 2,575,000.00
WIP, ending 300,000.00
COGM 2,275,000.00
FG, beginning 350,000.00
TGAFS 2,625,000.00
FG, ending 420,000.00
COGS 2,205,000.00

Problem 3

Sales forecast Projected Cash collection

July August September
July 60,000.00 48,000.00 12,000.00
August 90,000.00 72,000.00 18,000.00
September 130,000.00 104,000.00
Total sales forecast 280,000.00 48,000.00 84,000.00 122,000.00
3 (cash collection)

July credit sales 60,000.00

July cash collection 48,000.00
Balance of AR 12,000.00

Sales forecast (100%) 280,000.00

Cost of merchandise 168,000.00 (280,000*60%)

Projected COGS
Merchandise inv., beg 25,000
Purchases 195,000 (workback)
TGAFS 220,000
Merchandise inv., end 52,000
COGS 168,000