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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