MBA 560 Take Home Test3

MBA 560 Take Home Test3 - MBA 560 Take Home Test #3 Essay...

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MBA 560 Take Home Test #3 Essay Questions: 1. Discuss and explain each of the four operating budgets. 1 – How the estimates and projections are determined and 2 – what financial data is being projected, e.g. revenues, expenses or both. 3 - Also list and describe the different sections or schedules that each operating budget contains. a. Sales Budget – is a detailed schedule prepared by the marketing department showing expected sales for the coming periods and expected collections on those sales. It is critical to the success of the entire mater budgeting process. a.i. How are estimates and projections determined? a.i.1. The marketing department coordinates the development of the sales forecast a.ii. What financial data is being presented? a.ii.1. Revenues a.iii. Contains different sections or schedules? a.iii.1. Projected Sales section – this area contains projections of what the sales should and could be for the next year. It also shows each month what the sales on account should be and then how much should be collected the following month. a.iii.2. Schedule of Cash Receipts – This area projects/assumes that all account receivables will be collected from credit sales in full for a certain month. In practice, collections may be spread over several months and some receivables may become bad debts that are never collected. Regardless, the objective is to estimate the amount and timing of the expected cash receipts. Total cash receipts are determined by adding the current month’s cash sales to the cash collected from the previous month’s credit sales. a.iii.3. Pro Forma Financial Statement Data – this section will display the accounts receivables balance and the sales revenues. b. Inventory Purchases Budget – shows the amount of inventory a company must purchase to satisfy the demand projected in the sales budget. It allows business owners to determine how much money and goods are needed to reach desired goals. This particular budget is used for companies that have products in stock or inventory, as the value of inventory plays a large role in a complete purchases budget. b.i. How are estimates and projections determined? b.i.1. The total amount of inventory needed for each month is equal to the amount of the cost of budgeted sales plus the desired ending inventory. b.ii.
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This note was uploaded on 02/19/2012 for the course ACCOUNTING 560 taught by Professor Newell during the Fall '11 term at St. Leo.

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MBA 560 Take Home Test3 - MBA 560 Take Home Test #3 Essay...

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