Unformatted text preview: 0,000 360,000 460,000 January $60,000 180,000 240,000 Management estimates 5% of credit sales are uncollectible. Of the Management credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. sale Required: compute the budgeted cash receipts for January.
From credit sales in December: $360,000 (1-0.05)(1-0.60) From credit sales in January $180,000 (1-0.05)(0.60) From cash sales January TOTAL 136,800 102,600 60,000 299,400 Chapter 7 Flexible Budgets, Direct Cost Variances, and Management Control Management Recall – budgets are estimates of expected revenues, Recall estimates costs, and income for a period of time costs, Static budgets – prepared prior to start of budget period Flexible budgets – prepared after budget period had Flexible ended and used as part of variance analysis process ended recalculates budgeted revenues and costs using the actual recalculates output during the budget period output Favorable variances result in increased operating income Favorable compared to budgeted amounts compared Unfavorable variances result in less operating income compared Unfavorable to budgeted amounts to Chapter 7 Flexible Budgets, Direct Cost Variances, and M...
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