Coprehensive Cash Budegeting

it should be excel, and paper analysis.

Username: Carmen FredericoBook: Introduction to Management Accounting, Sixteenth Edition. No part of any book may
be reproduced or transmitted in any form by any means without the publisher’s prior written permission. Use (other than
pursuant to the qualified fair use privilege) in violation of the law or these Terms of Service is prohibited. Violators will be
prosecuted to the full extent of the law.
CHAPTER 7 0 INTRODUCTION TO BUDGETS AND PREPARING THE MASTER BUDGET 303
Both displays require three components per display. Therefore, the total cost of components for
50″ displays is $240 and for 42″ displays is $165. HDLD uses a 6-month continuous budget that is
revised monthly. Sales forecasts reflect the expectation that unit sales of 42″ displays will be 25%
higher than unit sales of 50″ displays. Sales forecasts for the next 8 months are as follows:
50″ Displays 42″ Displays
October 3,200 units 4,000 units
November 2,400 3,000
December 5,600 7,000
January 3,200 4,000
February 3,200 4,000
March 2,400 3,000
April 2,400 3,000
May 2,800 3,500
Treat each of the following events in succession.
1. Use spreadsheet software to prepare a table of budgeting information and an operating expense
budget for HDLD for October-March. Prepare a spreadsheet that can be revised easily for
succeeding months in parts 2 and 3.
2. October’s actual sales were 2,800 50″ displays and 3,600 42″displays. This outcome has caused
HDLD to revise its sales forecasts downward by 10%. Revise the operating expense budget for
N ovember-April.
3. At the end of November, HDLD decides that the proportion of 50″ to 42″ displays is changing.
Unit sales of 42″ displays are expected to be 50% higher than unit sales of 50″ displays sales.
Expected sales of 50″ displays are unchanged from number 2. Revise the operating expense bud-
get for December-May.
7-43 Comprehensive Cash Budgeting
Christine Morrison, treasurer of Salt Lake Light Opera (SLLO), was preparing a loan request to the
South Utah National Bank in December 2oX4. The loan was necessary to meet the cash needs of the
SLLO for year 2026. In a few short years, the SLLO had established itself as a premier opera com-
pany. In addition to its regular subscription series, it started a series for new composers and offered a
very popular holiday production. The holiday production was the most financially successful of the
SLLO’s activities, providing a base to support innovative productions that were artistically important
to the SLLO but did not usually succeed fmancially.
Exhibit 7-14
zoxz 2ox3 2ox4 Salt Lake Light Opera
Asset5 Balance Sheets as of
cash 9:638 $ 229 $ 208 December 31′ (In thousands
Accounts receivable 2,942 3,372 4,440 9′” °’°””=”’5)
Supplies inventory 700 700 500
Total current assets $6,330 $4,301 $ 5,148
Plant and equipment 2,643 4,838 5,809
Total assets $8,973 $9,139 $10,957
Liabilities and Equities
Bank loan $ 0 $ 0 $ 1,620*
Accounts payable 420 720 780
Accrued payroll expenses 472 583 646
Mortgage, current 250 250 250
Total current liabilities $1,142 $1,553 $ 3,296
Other payables 270
Mortgage payable, long-term 3,750 3,500 3,250
Net assets‘ 3,811 4,086 4,411 0
Total liabilities and equities $8,973 $9,139 $10,957
lncIudes $32,000 of accrued interest. 3
tThe “Net assets” account for a nonprofit organization is similar to “Stockholders’ equity” for a corporation. rlI