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Act 220 Ewing Master Budget Project

  • Date Submitted: 07/25/2016 08:12 AM
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ACT 220 Ewing Master Budget Project

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Master Budget Project (15 points, Master Budget Quiz is 20 points)

Cam’s Bookcases manufactures spirit-oriented bookcases for sale at college bookstores.   The company is completing its fifth year of operations and is preparing its master budget for the coming year (2015) based upon the following information:
a. Fourth-quarter sales for 2014 are 55,000 units.   Third quarter sales were 50,000 units.
b. Unit sales by quarter are projected as follows:

First quarter 2015 65,000
Second quarter 2015 70,000
Third quarter 2015 75,000
Fourth quarter 2015 90,000
First quarter 2016 80,000
Second quarter 2016 70,000

Each unit sells for $100.   Cam’s estimates that 60% of sales will be collected in the quarter of sale.   The company also estimates that 30% will be collected in the quarter following the sale and that 10% of each quarter’s sale will be collected in the second quarter following the sale.  
c. Cam’s tries to maintain at least 20% of next quarter sales forecast in inventory.   Beginning inventory in the first quarter of 2015 is 6,500 units.  
d. Each bookshelf uses one and a half hours of direct labor, five pieces of wood, and two cement moldings.   Laborers are paid $10 per hour, one piece of wood costs $8, and cement moldings are $2.50 each.
e. At the end of each quarter, Cam’s plans to have 20 percent of the wood needs and 30 percent of the molding needs for the next quarter’s projected production needs.  
f. Cam’s buys wood frames and cement moldings on account.   Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter.   Wages and salaries are paid on the 30th of each month.
g. Fixed overhead totals $900,000 each quarter.   Of this total, $200,000 represents depreciation.   All other fixed expenses are paid for in cash in the quarter...


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