chapter 7 lecture notes

# Total lots used in produckon 425

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Unformatted text preview: \$1,370,000 \$1,370,000 \$6,500,000 Total mktg & admin costs \$1,737,500 \$1,737,500 \$1,852,500 \$2,082,500 \$8,430,000 \$1,120,000 \$250,000 Lots from Revenue Budget VC/lot and Fixed Costs fm Mktg & Admin mgrs Preparing a Master Budget – Pull It All Together – Contrib Marg Stmt BuildIT BuildIT- PLUS Total Budgeted sales in lots Revenue Variable costs Manufacturing MarkeKng & AdministraKon ContribuGon margin Fixed costs Manufacturing MarkeKng & AdministraKon Proﬁt before taxes \$23,200,000 \$9,600,000 13,440,000 1,480,000 \$8,280,000 4,340,000 450,000 \$4,810,000 \$32,800,000 17,780,000 1,930,000 \$13,090,000 5,250,000 6,500,000 \$1,340,000 Proforma Statement = based on budget Cash Budget Purpose – determine if have the cash to sustain the projected operations Three components of a cash budget: –  Inflows –  Outflows –  Special items Cash Budget – Operating Inflows Proceeds from sales are the primary cash inflow from operations To calculate need Revenue Budget and the collection schedule Amarillo collects sales as follows: 60% in the first month 35% in the second month 5% in the third month Example: Quarter 1 sales were \$6,270,000 Cash collected is: 1st month collect - \$6,270,000 x 60% = \$3,762,000 2nd month collect - \$6,270,000 x 35% = \$2,194,500 3rd month collect - \$6,270,000 x 5% = \$313,500 Cash Budget – Operating Inflows Collection Schedule: 60% in first month / 35% in second month / 5% in third month Last year's sales Quarter 1 sales Quarter 2 sales Quarter 3 sales Quarter 4 sales Total cash collected Cash Collected Quarter 1 Quarter 2 Quarter 3 \$2,625,000 \$350,000 \$3,762,000 \$2,194,500 \$313,500 \$3,762,000 \$2,194,500 \$4,920,000 \$6,387,000 \$6,306,500 \$7,428,000 Quarter 4 \$313,500 \$2,870,000 \$7,236,000 \$10,419,500 Total \$2,975,000 \$6,270,000 \$6,270,000 \$7,790,000 \$7,236,000 \$30,541,000 Cash Budget – Operating Outflows Four types of cash outflows: •  Purchase of direct materials •  Payments for labor •  Expenditures on manufacturing overhead •  Marketing and administration costs Cash Budget – Operating Outflows – Direct Materials To calculate the cash outflow for direct material purchases need Direct Materials budget and cash payment sched...
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