Prepare a number of budgets and comment on the development and significance of each of them.
Please see attached for case.
The attached file gives the calculations for the income statement, cash budget and the balance sheet. The calculations are in the calc sheet and these calculations are then transferred to the budget sheet to give the budgets. All explanations have been given so that you understand the process.
The following points to be noted
1. Taxes have not been considered as not given
2. New Plant purchase has been added in balance sheet and not in income statement as it will be depreciated. It is assumed to be paid in cash on purchase.
The development and importance and significant features of each budget:
a. Sales Budget- The sales budget is developed using the selling price and the quantity data made available. This gives the most important figures - the expected revenues. All expenses have to be paid from by the revenues generated by the sale. The sales budget shows that sales are increasing every quarter and that is a healthy sign
b. Production Budget - The production budget is developed from the number units required to be sold and the number of units required to be kep in inventory for the next period. Opening Units-Sales-Closing Units give the units ...
The solution explains how to make the individual budgets which together form the master budget for Pialligo Inc