The Robbins Company is preparing its cash payments budget. The following items relate to cash payments the company anticipates making during the second quarter of the upcoming year. a. The company pays for 45% of its direct materials purchases in the month of purchase and the remainder the following month. The company’s direct material purchases for March through June are anticipated to be as follows in picture 1: b. Direct labor is paid in the month in which it is incurred. Direct labor for each month of the second quarter is budgeted as follows in picture 2: c. Manufacturing overhead is estimated to be 140% of direct labor cost each month. This monthly estimate includes $36,000 of depreciation on the plant and equipment. All manufacturing overhead (excluding depreciation) is paid in the month in which it is incurred. d. Monthly operating expenses for March through June are projected to be as follows: March: $74,000 April: $87,000 May:$84,000 June:$92,000 Monthly operating expenses are paid in the month after they are incurred. Monthly operating expenses include $8,000 for monthly depreciation on administrative offices and equipment, and $2,800 for bad debt expense. The company plans to pay $7,000 (cash) for a new server in May. The company must make an estimated tax payment of $14,000 on June 15. Requirement Prepare a cash payments budget for April, May, and June and for the quarter
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The Robbins Company is preparing its
a. The company pays for 45% of its direct materials purchases in the month of purchase and the remainder the following month. The company’s direct material purchases for March through June are anticipated to be as follows in picture 1:
b. Direct labor is paid in the month in which it is incurred. Direct labor for each month of the second quarter is budgeted as follows in picture 2:
c. Manufacturing overhead is estimated to be 140% of direct labor cost each month. This monthly estimate includes $36,000 of depreciation on the plant and equipment. All manufacturing overhead (excluding depreciation) is paid in the month in which it is incurred.
d. Monthly operating expenses for March through June are projected to be as follows: March: $74,000 April: $87,000 May:$84,000 June:$92,000
Monthly operating expenses are paid in the month after they are incurred. Monthly operating expenses include $8,000 for monthly depreciation on administrative offices and equipment, and $2,800 for
- The company plans to pay $7,000 (cash) for a new server in May.
- The company must make an estimated tax payment of $14,000 on June 15.
Requirement
Prepare a cash payments budget for April, May, and June and for the quarter
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