Victoria Kite Company sells kits on the web wants a master budget for
The next three months beginning January 1, 2005.
1) It desires an ending minimum cash balance of $5,000 each month.
2) Sales forecasted at an average wholesale selling price of $8 per kite.
In January, Victoria Kite is beginning just-in-time (JIT) deliveries from suppliers, which means that purchases equal expected sales
3) On January 1, purchases will cease until inventory reaches $6,000, after which time purchases will equal sales. Merchandise costs average $4 per kite.
4) Purchases during any given month are paid in full during the following month.
5) All sales are on credit, payable within 30 days, but experience has show that:
60% of current sales are collected in the current month,
30% in the next month, and
10% in the month thereafter. Bad debts are negligible.
6) Monthly operating expenses are as follows:
Wages and salaries $15,000
Insurance expired 125
Depreciation 250
Miscellaneous 2,500
Rent 250/month + 10% of quarterly sales over 10,000
7) Cash dividends of $1,500 are to be paid quarterly, beginning January 15, and are declared on the fifteenth ...